WTI holds above $65.00, trading near three-week highs as pressure mounts on Russian Oil

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West Texas Intermediate (WTI) Oil price extends its gains for the fourth successive session, trading around $65.10 per barrel during the Asian hours on Friday.

WTI price reached a three-week high of $65.18 on Friday.
President Trump presses Turkish President Erdogan to end Russian Oil imports to tighten pressure on Moscow.
Russia to impose partial diesel export ban, extend gasoline ban — Russian Deputy Prime Minister Alexander Novak.

West Texas Intermediate (WTI) Oil price extends its gains for the fourth successive session, trading around $65.10 per barrel during the Asian hours on Friday. The WTI price rises to near a three-week high due to prevailing supply concerns, driven by pressures on Russian Oil related to the Ukraine-Russia conflict.

United States (US) President Donald Trump asked Turkish President Recep Tayyip Erdogan to stop buying Russian Oil in a bid to tighten pressure on Moscow over the Ukraine conflict. Additionally, Washington will also impose sanctions from October 1 on Serbia’s Russian-owned oil company NIS, which operates the country’s only refinery. The US Treasury’s Office of Foreign Assets Control had first sanctioned Russia’s oil sector on January 10, giving Gazprom Neft 45 days to divest its stake in NIS.

Reuters cited IG analyst Tony Sycamore, saying "Gains were supported by ongoing Ukrainian drone strikes targeting Russian oil infrastructure, NATO's warning to Russia it is ready to respond to future violations of its airspace and Russia's move to halt key fuel exports."

A decline in Oil refining capacity has brought Russia close to cutting crude production, and several regions are already experiencing shortages of certain fuel grades. On Thursday, Russian Deputy Prime Minister Alexander Novak announced to impose a partial ban on diesel exports would be imposed until the end of the year, while extending its existing ban on gasoline exports.

The upside of Crude Oil prices could be restrained amid uncertainty surrounding the Federal Reserve (Fed) policy stance. Chicago Fed President Austan Goolsbee noted that he was not eager to do a lot more policy easing while inflation is above target and moving the wrong way. Meanwhile, Fed Governor Stephen Miran, the Fed's newest policymaker, preferred a more aggressive 0.50% cut to prevent labor market collapse.

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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.