WTI advances to near $66.50, upside seems limited due to rising US growth concerns
- WTI price may face challenges as demand concerns grow over a potential US economic slowdown.
- The dollar-denominated commodity found support from a weaker US Dollar.
- API report indicated that US crude oil stockpiles increased by 4.247 million barrels last week, following a 1.455-million-barrel previous decline.
West Texas Intermediate (WTI) Oil price gains ground for the second successive day, trading $66.40 during the European hours on Wednesday. However, Oil prices faced downward pressure amid rising demand concerns over a potential US economic slowdown and the impact of tariffs on global growth, which limited further gains.
However, a weaker US Dollar (USD) might have limited the downside for the Oil prices, driven by growing fears of an economic downturn in the United States (US). President Donald Trump referred to the economy as being in a "transition period," and investors interpreted these remarks as an early warning of potential instability.
Adding to market uncertainty, US stock prices continued to decline on Tuesday, extending the largest selloff in months as investors reacted to higher import tariffs and weakening consumer sentiment. With ongoing ambiguity surrounding tariff developments and persistent worries over US economic growth, Oil market sentiment remains cautious.
Meanwhile, a Houthi spokesperson announced late Tuesday that the group would target any Israeli vessel violating its ban on Israeli ships navigating through the Red and Arabian Seas, the Bab al-Mandab Strait, and the Gulf of Aden, effective immediately.
In the US, the latest American Petroleum Institute (API) report showed crude Oil stockpiles rose by 4.247 million barrels for the week ending February 28, following a 1.455-million-barrel decline the previous week. Analysts had expected an increase of 2.1 million barrels.
Additionally, the US joined other agencies in revising Oil market projections. The International Energy Agency (IEA) cut its 2025 surplus forecast and halved its estimated glut for next year due to anticipated declines in Iranian and Venezuelan crude output. The Energy Information Administration (EIA) also projected a decline in global Oil inventories in Q2 2025.
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.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
