- WTI price attracts some sellers to near $61.80 in Monday’s Asian session.
- Trump said he will urge Zelenskiy to make a quick deal.
- Traders will closely watch Trump’s meeting with Zelenskiy later on Monday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.80 during the Asian trading hours on Monday. The WTI tumbles as traders remain cautious ahead of US President Donald Trump’s meeting with Ukrainian President Volodymyr Zelenskiy on Monday.
Trump said after his talks with Russian President Vladimir Putin in Alaska on Friday that he will urge Zelenskiy to make a quick deal, and sounded receptive to Putin’s demand that Ukraine give up large swathes of land, per Bloomberg. Trump early Monday further stated that Zelenskiy can end the war with Russia almost immediately if he wants to, or he can continue to fight.
Ukrainian leader facing US pressure to reach a peace deal with Russia that involves ceding territory. Oil traders will closely monitor the developments surrounding Trump-Zelenskiy talks. Any signs of escalating tensions could boost the WTI price, while a potential ceasefire could exert some selling pressure on the black gold.
Also, investors are looking for more cues that the US may move closer to Russia in a bid to exploit vast, untapped Arctic energy resources, in a dramatic geopolitical shift that puts pressure on Europe to quickly increase defense expenditure, according to Reuters.
Bank of America strategist Michael Hartnett emphasized that US-Russia Arctic drilling initiatives have the potential to extract 15% of the world’s undiscovered oil and 30% of the world’s undiscovered natural gas, leading to a significant energy bear market.
Meanwhile, the expectation that the US Federal Reserve (Fed) will cut rates at the September meeting could undermine the US Dollar (USD) and lift the USD-denominated commodity prices. According to the CME FedWatch tool, Fed funds futures traders are now pricing in nearly a 93% chance of a 25 basis point (bps) cut next month, up from an 85% chance last week.
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.