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WTI climbs to near $67.00 on escalating Middle East tensions
West Texas Intermediate, the US crude oil benchmark, is trading around $67.00 during the Asian trading hours on Thursday. The WTI price climbs to near two-month highs amid heightened geopolitical tensions in the Middle East.
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EUR/USD has room to advance further
EUR/USD hit fresh tops north of 1.1600 the figure for the first time since October 2021 against the backdrop of an increasingly deteriorated USD outlook. Indeed, the strong selling pressure in the Greenback came in response to another discouraging US inflation results, extra easing of the labour market, and expectations of maybe three rate reductions by the Fed this year.
GBP/USD looks bullish just below 1.3600
GBP/USD maintains its constructive stance in place in the latter part of Thursday’s session, hovering just below 1.3600 the figure on the back of heightened losses in the Greenback. In the meantime, investors continue to pencil in two potential rate cuts by the Fed for the remainder of the year.
USD/JPY extends losses below 143.60 amid broad-based Dollar weakness
US Dollar is among the weakest G8 currencies on Thursday. The risk-averse sentiment triggered by a fresh tariff threat by US President Trump, coupled with higher hopes of Fed cuts, is pushing the USD/JPY to fresh weekly lows below 143.60.
Gold consolidates its gains near $3,380
Gold maintains its weekly rebound well in place, now trading in the sub-$3,400 region per troy ounce in response to the persistent selling bias in the US Dollar, declining US yields across the curve and growing geopolitical tensions.
WTI climbs to near $67.00 on escalating Middle East tensions
West Texas Intermediate, the US crude oil benchmark, is trading around $67.00 during the Asian trading hours on Thursday. The WTI price climbs to near two-month highs amid heightened geopolitical tensions in the Middle East.
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About Oil
Oil Highlights
Crude oil, commonly known as petroleum, is a naturally occurring fossil fuel liquid composed of hydrocarbon underground deposits and organic materials. Its prices are typically measured in US Dollars (USD).
The top Oil-producing countries include Saudi Arabia, Russia, the United States, Iran, and China, while the largest consumers are the United States, China, Japan, Russia, and Germany.
Crude Oil is classified into various grades according to density (heavy versus light) and sulfur content (sour versus sweet). Lighter and sweeter crude commands higher prices because refiners can produce a greater yield of high-quality refined products from it.
Density is measured by API gravity, a scale developed to compare the density of petroleum to water. An API greater than 10 means the liquid floats on water. In general, crude Oils with API values between 40 and 45 degrees have the highest
commercial value.
Sulfur content determines the quality of crude Oil. Crude with high sulfur content (sour crude) is less pure and sells cheaper compared to crude with low sulfur content (sweet crude).
Major benchmarks
There are two main benchmarks for pricing crude Oil: West Texas Intermediate (WTI) from the United States (US) and Brent from the United Kingdom (UK).
WTI Crude
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”.
Most WTI crude Oil is refined in the Midwest and the Gulf Coast regions of the US.
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, are 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.
WTI serves as a benchmark in Oil pricing and is the underlying commodity of NYMEX Oil futures contracts.
Brent
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.
Brent crude is a blend from 15 different oil fields in the North Sea. It has an API gravity of 38.3 degrees and a sulfur content of around 0.37%, making it heavier and less sweet than WTI crude. Brent is suitable for the refinery of gasoline and middle distillates.
Originally traded on the International Petroleum Exchange in London, Brent crude futures have been listed on the Intercontinental Exchange (ICE) since 2005.
Oil and USD/CAD Correlation
The special relationship between Oil and the Loonie
Canada is among the world's largest Oil producers and it exports crude primarily to the US. This trade relationship directly impacts the Canadian Dollar (CAD), popularly known as the Loonie. Since Canadian dollars are needed to purchase and move Oil across the border, the fluctuation in Oil prices has a direct impact on the USD/CAD pair.
When Oil prices decline, the demand for the Loonie often weakens, causing USD/CAD to rise. Conversely, higher Oil prices frequently lead to CAD strength and a drop in the pair.
Oil prices are a significant factor influencing the Loonie’s price action, alongside risk sentiment and economic fundamentals. If you are trading USD/CAD, monitoring Oil charts can provide crucial insights.