WTI trades with modest intraday losses below mid-66.00s; lacks bearish conviction
- WTI edges lower amid worries that Trump’s trade tariffs would impact fuel demand.
- OPEC+ will proceed with oil output hikes from April, further weighing on Oil prices.
- Trump’s threat to impose more sanctions on Russia and a weaker USD lend support.
West Texas Intermediate (WTI) US Crude Oil prices struggle to capitalize on Friday's modest gains and attract fresh sellers at the start of a new week. The commodity currently trades just below mid-$66.00s, down nearly 0.60% for the day, and seems vulnerable to slide further.
Investors remain worried about the potential economic fallout from US President Donald Trump's trade tariffs and their impact on fuel demand. Furthermore, the Organization of the Petroleum Exporting Countries and its allies – collectively known as OPEC+ – said it will proceed with oil output hikes from April. This, in turn, is seen as a key factor weighing on Crude Oil prices.
The downside for the black liquid, however, seems limited in the wake of Trump's warning that the US would increase sanctions on Russia if the latter fails to reach a ceasefire with Ukraine. However, two people familiar with the matter told Reuters that the US is also studying ways to ease sanctions on Russia’s energy sector if the latter agrees to end its prolonged war with Ukraine.
Meanwhile, the weaker US jobs report released on Friday reaffirmed market bets that the Federal Reserve (Fed) remains on track to cut interest rates multiple times this year. This keeps the US Dollar (USD) depressed near its lowest level since November, which should act as a tailwind for USD-denominated commodities and contribute to limiting losses for Crude Oil prices.
WTI Oil FAQs
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”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, 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, is 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.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI 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 WTI 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.