WTI Crude Oil range-bound as peace talks ease risks but supply concerns linger
- WTI Crude Oil trades slightly higher on Tuesday near $62.50, holding within last week’s $62-$63 range.
- Optimism over Russia-Ukraine peace talks eases some geopolitical risk premium.
- Macro forecasts from the EIA and IEA warn of a possible supply glut as output outpaces demand.
West Texas Intermediate (WTI) Crude Oil is trading with a slightly firmer tone on Tuesday, trading near $62.40 per barrel, as traders reacted to signs of progress in peace talks between Russia and Ukraine.
Oil remains nestled within last week's firmly established $62-$63 trading band, showing the market’s uncertainty. While hopes for an end to the war reduced some geopolitical tension, a peace deal could also bring more Russian Oil back to the market, putting downward pressure on prices.
Meanwhile, investors are also digesting fresh macroeconomic signals that highlight growing downside risks for Oil demand. Recent projections from global energy agencies suggest that rising output from major producers, including OPEC+ and US shale operators, may continue to outpace consumption, especially if growth in key economies slows further.
The broader market tone remains cautious, with the US Energy Information Administration (EIA) flagging rising crude inventories and a potential oversupply scenario in its latest outlook. At the same time, the International Energy Agency (IEA) has shifted focus back to more conservative demand forecasts based on current policy trajectories, reinforcing concerns of a longer-term imbalance.
Crude Oil came under significant pressure earlier this month after US President Donald Trump announced plans to impose an additional 25% tariff on Russian oil imports, escalating trade tensions and injecting fresh volatility into energy markets. Trump also signaled that similar tariff measures could be extended to China, amplifying fears of a broader disruption to global Oil flows. The announcement triggered a sharp sell-off in Oil futures, with WTI down nearly 10% month-to-date, as traders reassessed the demand outlook amid rising geopolitical and trade-related headwinds.
As the proposed tariffs near their end-of-month implementation, market participants are already adjusting strategies. According to The Times of India, several Indian refiners have delayed purchasing September-loading Russian crude amid uncertainty over pricing and trade logistics.
In contrast, CNN reported that Chinese refiners are moving swiftly to lock in supply. Muyu Xu, senior crude oil analyst at commodities tracker Kpler, noted that state-owned and private Chinese refiners have already booked 13 cargoes for October and two more for November. “This is an opportunistic move,” Xu told CNN. “Russian oil remains at least $3 a barrel cheaper than Middle Eastern alternatives. Taking advantage of this opportunity while prices are low, more refineries may consider buying within the next week or two.”
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
Vishal Chaturvedi
FXStreet
I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.
