- WTI gains ground due to heightening fears of supply disruptions amid rising uncertainties in the Middle East.
- Israel launched strikes on southern Beirut while US Secretary of State Antony Blinken was touring the region, urging for a ceasefire.
- Oil prices faced challenges as EIA Crude Oil Stocks Change showed an increase of 5.474 million barrels.
West Texas Intermediate (WTI) Oil price recovers its recent losses from the previous session, trading around $71.60 per barrel during Asian trading hours on Thursday. Concerns over the Middle East conflict continue to weigh on investors, heightening fears of potential supply disruptions from the region, which is helping to support crude Oil prices.
On Wednesday, Israeli strikes hit southern Beirut, while US Secretary of State Antony Blinken toured the region, advocating for a ceasefire in both Gaza and Lebanon. Iran-backed Hezbollah intensified its attacks on Israel, deploying “precision missiles” for the first time and launching new types of drones targeting Israeli sites. Hezbollah also claimed to have struck an Israeli military factory near Tel Aviv, per Reuters.
Oil prices came under pressure due to a larger-than-expected build in US stockpiles, as imports increased and gasoline inventories unexpectedly rose. This came after refineries ramped up production following seasonal maintenance. The US Energy Information Administration (EIA) reported a crude oil stock increase of 5.474 million barrels, bringing total inventories to 426 million barrels for the week ending October 18—well above the forecasted rise of 0.7 million barrels.
Meanwhile, the US Dollar Index (DXY), which tracks the US Dollar’s (USD) value against six major currencies, surged to its highest level since late July, reaching 104.57 on Wednesday. This further weakened the demand for dollar-denominated Oil.
Signs of economic resilience and rising inflation concerns have lessened the chances of a significant rate cut by the Federal Reserve in November. Higher borrowing costs could strain the US economy, the world’s largest Oil consumer, potentially dampening economic activity and reducing Oil demand.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Source: https://www.fxstreet.com/news/wti-trades-around-7150-recovers-recent-losses-due-to-rising-supply-concerns-202410240254