WTI drifts higher to near $63.50 on trade deal hopes, fresh Iran sanctions
- WTI price extends the rally to a two-week high around $63.50 in Friday’s Asian session.
- Trump expressed optimism about reaching a trade deal with the EU.
- US sanctions on Iran raise supply concerns, boosting the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.50 during the Asian session on Friday. The WTI price edges higher to a two-week high amid hopes for a trade deal between the United States and the European Union and fresh US sanctions on Iran. Trading volume is likely to be lightened on Good Friday.
US President Donald Trump and Italian Prime Minister Giorgia Meloni met in Washington, signaling hope for resolving trade disputes that have strained US-European ties. "We're going to have very little problem making a deal with Europe or anybody else, because we have something that everybody wants," Trump told reporters.
The new US sanctions to curb Iranian oil exports continued to elevate supply concerns and lift the WTI price. The statement noted that the US continues to aggressively sanction Iran under the Trump-era 'maximum pressure' policy. As long as Iran attempts to generate oil revenues to fund its destabilizing activities, the US will hold both Iran and all of its sanctions evaders responsible.
"The U.S. continues to aggressively sanction Iran and impose sanctions against buyers of Iranian oil. OPEC+ has also provided updates and reassurance to the market, stating that they remain in control with flexibility to cut production if needed,” said analysts at energy consulting firm Gelber and Associates.
About the data, the Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending April 11 increased by 515,000 barrels, compared to a rise of 2.553 million barrels in the previous week. The market consensus estimated that stocks would increase by 400,000 barrels.
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.