West Texas Intermediate (WTI) Oil fell on Tuesday during the European session, trading at $65.31 after a previous close of $65.68. Brent Oil also dropped to $68.05 from $68.39. WTI Oil is a well-known type of Crude Oil. It is light and sweet, meaning it has low density and low sulfur content. It is a key benchmark in the global Oil market and is sourced from the United States, mainly distributed through the Cushing hub.

Factors Influencing WTI Oil Prices

WTI Oil prices mainly depend on supply and demand. Global economic conditions, political events, and OPEC’s actions can impact prices. The value of the US Dollar also matters since oil is traded in dollars. Regular inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) help monitor supply and demand. A decrease in inventories signals higher demand and may increase prices, while an increase suggests more supply, which likely lowers prices. Many consider the EIA’s data more reliable. OPEC significantly affects WTI prices by adjusting the production quotas of its members. Changes in these quotas can either raise or lower oil prices based on production limits or increases. Given the recent price decline, we think derivative traders should look for signs of a market bottom. We’ll be closely watching the weekly inventory reports, as they reflect the current market balance. A notable drop in stockpiles could indicate that the recent price decline is too much.

Upcoming OPEC Meeting Impact

We expect the Organization of the Petroleum Exporting Countries (OPEC) and its allies to extend their voluntary production cuts of 2.2 million barrels per day in their meeting on June 2. This action aims to tighten global supply and support prices. Historically, OPEC’s production discipline has helped prevent larger price declines. Demand factors are becoming more favorable as we enter the summer driving season in the northern hemisphere. In the U.S., the Memorial Day weekend typically marks the start of higher fuel consumption. We believe this seasonal increase will boost prices in the coming weeks. Recent data from the Energy Information Agency adds weight to this view, showing a crude oil inventory drop of 4.2 million barrels—much larger than the expected 1.9 million barrel drop. This strongly indicates that demand is strong. Therefore, we are considering strategies to profit from a potential price increase. Buying call options or setting up bull call spreads on WTI contracts could be a smart move to take advantage of a price rise driven by tightening supply and growing seasonal demand. Create your live VT Markets account and start trading now.

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