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WTI price corrects after failing to return above $100
West Texas Intermediate (WTI) trade over 1% lower to near $93.10 during the early European trading session. The oil price faces selling pressures as multiple events relating to Middle East conflicts, such as Israel’s pledge to refrain attacking Iranian oil infrastructure and potential talks on removal of sanctions on Iran’s oil stuck in the sea, have eased oil supply concerns.
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EUR/USD bounces off lows, back to 1.1560
EUR/USD manages to pick up some pace and rebounds from earlier lows, revisiting the 1.1560 region on Friday, giving back part of Thursday’s ECB-driven rally. Meanwhile, the US Dollar trades with marked gains, supported by a cautious tone across global markets and persistent geopolitical tensions.
GBP/USD meets support around 1.3300
GBP/USD retreats on Friday, surrendering part of Thursday’s strong advance and dropping to as low as the 1.3300 region. The US Dollar draws support from the softer risk tone, making it harder for Cable to hold its ground as investors digest the latest developments around the Middle East crisis.
USD/JPY bounces alongside USD, retakes 158.00
USD/JPY is rebounding alongside the US Dollar in Friday's Asian trading, retaking 158.00 after having dropped 1.25% on Thursday, in a session dominated by broad Yen strength. The pair had rallied to within a few pips of the 160.00 level earlier in the week before reversing sharply, and Thursday's large bearish candle erased most of the gains accumulated over the prior five sessions.
Gold resumes the decline, challenging $4,600
The bearish tone in Gold remains well in place for yet another day on Friday, with prices of the troy ounce of the yellow metal threatening once again the $4,600 mark. The precious metal’s decline comes on the back of persistent tensions in the Middle East, rising US Treasury yields and a firmer Greenback.
WTI price corrects after failing to return above $100
West Texas Intermediate (WTI) trade over 1% lower to near $93.10 during the early European trading session. The oil price faces selling pressures as multiple events relating to Middle East conflicts, such as Israel’s pledge to refrain attacking Iranian oil infrastructure and potential talks on removal of sanctions on Iran’s oil stuck in the sea, have eased oil supply concerns.
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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.