- WTI is cautiously steady above $70.00 as investors stare at the Trump-Putin meeting.
- The impact of the Russia-Ukraine truce would be negative for the Oil price.
- OPEC will likely delay its planned monthly supply increase.
West Texas Intermediate (WTI), futures on NYMEX, trades with caution above the seven-week low of $70.15 in Monday’s European session. The Oil price trades cautiously as investors seek more development in the Russia-Ukraine peace talks.
Last week, United States (US) President Donald Trump confirmed that both leaders of Russia and Ukraine have agreed to peace negotiations.
Donald Trump said that he had a “lengthy and highly productive” conversation with Russian leader Vladimir Putin, and he agreed to start peace negotiations with Ukraine. Also, he ordered his team to begin peace talks.
Over the weekend, Trump also said that he is expected to discuss ending the three-year-long war in Ukraine in the coming days.
Analysts at Philip Nova expect, "If negotiations lead to a resolution, more Russian barrels would enter global supplies, which could significantly impact oil prices negatively."
Meanwhile, reports that OPEC is planning to delay its planned monthly supply increases, which were expected to begin in April, have offered a temporary relief to the Oil price, Bloomberg reported.
The decision is contrary to President Donald Trump’s urge to Saudi Arabia to increase Oil output by two million barrels last month.
Brent Crude Oil FAQs
Brent Crude Oil is a type of Crude Oil found in the North Sea that is used as a benchmark for international Oil prices. It is considered ‘light’ and ‘sweet’ because of its high gravity and low sulfur content, making it easier to refine into gasoline and other high-value products. Brent Crude Oil serves as a reference price for approximately two-thirds of the world's internationally traded Oil supplies. Its popularity rests on its availability and stability: the North Sea region has well-established infrastructure for Oil production and transportation, ensuring a reliable and consistent supply.
Like all assets supply and demand are the key drivers of Brent Crude 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 Brent 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 Brent Crude 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 Brent Crude 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.
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