West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $59.30 during early European trading hours on Monday. WTI crude oil price remains steady amid easing tensions in Iran and broader risk-off sentiment. Traders are bracing for the American Petroleum Institute (API) crude oil inventories report on Tuesday.
Although tensions did not escalate in Iran over the weekend, Supreme Leader Ayatollah Khamenei said several thousand people had been killed in anti-government protests this month.
Traders will be closely monitoring developments surrounding the situation in Iran. At least one US aircraft carrier was moving to the Middle East as of Friday, after US President Donald Trump indicated he would postpone attacking Iran, Fox News reported, citing military sources.
Trump said Saturday that he would impose an additional 10% import tariff starting February 1 on goods coming from Denmark, Norway, Sweden, France, Germany, the Netherlands, Finland and the United Kingdom until the United States is allowed to buy Greenland.
European leaders are expected to hold an emergency meeting in the coming days to discuss possible retaliation. Trump’s recent tariff threats against Europe over Greenland could hurt market sentiment and weigh on the price of WTI.
The API crude oil inventories report will be published on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could boost the WTI price, while a larger-than-expected build indicates weak demand or oversupply, which could push the WTI price lower.
Frequently asked questions about West Texas Intermediate crude oil
West Texas Intermediate oil is a type of crude oil that is sold in international markets. WTI stands for WTI, and is one of three main types including Brent and Dubai crude. WTI is also referred to as “light” and “sweet” due to its relatively low gravity and sulfur content, respectively. It is considered a high quality oil and easy to refine. It is sourced from the United States and distributed through the Cushing Hub, considered the “pipeline crossroads of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
Like all assets, supply and demand are the main drivers of the price of WTI. 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 affect prices. Decisions by OPEC, a group of major oil-producing countries, are another major driver of the price. The value of the US dollar affects the price of WTI, as oil is mostly traded in US dollars, so a weak US dollar can make oil more affordable and vice versa.
Weekly oil inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI. Changes in inventories reflect fluctuations in supply and demand. If data shows a decline in inventories, this could indicate increased demand, leading to higher oil prices. High inventories can reflect increased supply, causing prices to fall. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, falling within 1% of each other 75% of the time. EIA data is more reliable, because it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 oil-producing countries that collectively decides production quotas for member countries at meetings held twice a year. Their decisions often affect WTI prices. When OPEC decides to cut its quotas, it can tighten supply, causing oil prices to rise. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten additional non-OPEC members, most notably Russia.
