- The WTI attracts some buyers in the fall on Tuesday, although it lacks a strong tracking.
- The relief of fears due to interruptions in the supply and concerns about the commercial war limit the commodity’s profits.
- The geopolitical risk premium and a bassist USD act as a tail wind for black liquid.
The prices of crude oil West Texas Intermediate (WTI) of the US rise slightly during the Asian session on Tuesday, although the intradiario rebound lacks bullish conviction. The commodity remains below a maximum of two weeks reached last Friday and currently trades around the region of 62.80 $ -62.85 $, with an increase of just over 0.30% in the day.
The signs of progress in conversations on the nuclear agreement between the US and Iran helped relieve concerns about the supply, which, in turn, was seen as a key factor behind the night fall in crude oil prices. In fact, USA and Iran agreed on Saturday to initiate discussions at the expert level to design a framework for a possible nuclear agreement. Expert meetings are scheduled for Wednesday, with a planned monitoring session for Saturday to evaluate progress.
In addition to this, the concerns that a total commercial war would trigger a global recession and affect the demand for fuel contribute to limit the bullish potential of the black liquid. However, the geopolitical risk premium remains at stake due to the prolonged war between Russia and Ukraine. This, together with the underlying bearish feeling around the US dollar (USD), acts as a tail wind for the commodities called in USD, including prices of crude oil.
Meanwhile, Trump accused the president of the Federal Reserve (Fed), Jerome Powell, not to act quickly enough to reduce interest rates. In addition, the White House suggested that Trump and his team are studying if they could say goodbye to Powell, which generates doubts about the independence of Fed. This adds to the weakening of investors’ confidence in the US economy and does not help USD register any significant recovery from a minimum of three years established on Monday.
The aforementioned mixed fundamental background justifies some caution before opening aggressive directional positions around crude oil prices. Operators could also choose to wait for the publication of the preliminary PMIS on Wednesday to obtain clues about global economic health, which, in turn, should provide a significant impulse to the commodity.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
