WTI edges higher above $59.50 as US Dollar weakness offsets supply concerns
- WTI price drifts higher to near $59.85 in Friday’s early European session.
- Trump softened threats toward Greenland, supporting the WTI price.
- US crude oil inventories showed a bigger-than-expected rise last week.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $59.85 during the early European trading hours on Friday. The WTI price edges higher amid a weaker US Dollar (USD) and risk-on mood in wider markets.
The USD weakens across the board after US President Donald Trump dropped tariff threats and ruled out seizing Greenland by force, helping calm jittery markets. Trump added that the US and the North Atlantic Treaty Organization (NATO) had formed the framework of a future deal with respect to Greenland.
“US dollar weakness is offering support to prices,” said Warren Patterson, head of commodities strategy at ING Groep NV. “The outlook for the market remains bearish, but the raft of geopolitical and supply risks means the outlook for lower prices is taking longer to materialize.”
US crude oil inventories rose last week, which might drag the WTI price lower. According to the US Energy Information Administration (EIA) weekly report, crude oil stockpiles in the US for the week ending January 16 climbed by 3.602 million barrels, compared to a rise of 3.391 million barrels in the previous week. The market consensus estimated that stocks would increase by 1.1 million 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.