WTI edges higher above $69.50 on Venezuela supply concerns
- WTI price gains momentum to near $69.60 in Thursday’s early Asian session.
- Trump said any country buying Venezuelan oil will face a 25% tariff.
- Crude oil stockpiles in the US fell by 3.341 million barrels last week, according to the EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.60 during the early Asian session on Thursday. The WTI price extends the rally to a near four-week high amid mounting concerns about tighter global supply after the US threat of tariffs on countries buying Venezuelan production.
WTI price has been supported since US President Donald Trump slapped a 25% secondary tariff on nations that buy Venezuelan oil or gas, effective April 2. According to Commerce Department trade data, the United States purchased $5.6 billion worth of oil and gas from Venezuela in 2024, making it one of the top foreign suppliers of oil to the US last year.
The decline in crude oil inventories contributes to an increase in crude oil prices. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the United States for the week ending March 21 fell by 3.341 million barrels, compared to an increase of 1.745 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.6 million barrels.
On the other hand, a maritime and energy ceasefire between Russia and Ukraine offset concerns about tighter global supply, which might cap the upside for the WTI price. The US reached deals with Ukraine and Russia to pause attacks at sea and against energy targets, with Washington also attempting to ease certain sanctions against Moscow.
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.