18/09/25

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The price of West Texas Intermediate (WTI) crude oil has declined marginally in the early Asian session, trading near $63.60 per barrel. The downside appears to be driven by a significant increase in U.S. distillate inventories, which raises concerns about declining demand amid a broader uncertain demand outlook. Despite this, geopolitical factors, particularly ongoing tensions involving Russia, may serve to limit further downside in the near term.

Data released by the U.S. Energy Information Administration (EIA) indicates a substantial reduction in U.S. crude oil stocks last week, with inventories falling by approximately 9.3 million barrels. This decline exceeds market expectations, which had predicted a draw of about 1.5 million barrels. Such a substantial reduction typically signals robust domestic demand and can support higher oil prices. Conversely, the buildup of distillate stocks by around 4 million barrels raises uncertainty regarding consumption levels, adding a bearish element to the current pricing environment.

Geopolitical developments continue to influence market sentiment. Recent attacks on critical Ukrainian infrastructure by Russia’s forces have heightened risks associated with Russian oil exports. Reports suggest that Russia’s pipeline operator, Transneft, may be forced to reduce production if export disruptions persist, which could tighten global supplies and bolster prices.

WTI crude maintains its status as a key benchmark in the global oil markets, characterized by its relatively light and sweet qualities, making it highly desirable for refining. The price fluctuations are primarily driven by global demand, supply levels, political stability, and decisions by major oil producers, notably the Organization of the Petroleum Exporting Countries and its allies (OPEC+). The value of the US dollar also plays a crucial role, with a weaker dollar typically supporting higher oil prices due to increased affordability for international buyers.

Weekly inventory reports from the EIA and the industry-backed API provide essential insights into supply-demand dynamics. A reduction in inventories generally points to higher demand, underpinning price increases, whereas rising stocks can exert downward pressure. Market participants closely monitor these figures alongside geopolitical and macroeconomic developments, which collectively shape oil price trajectories.