WTI drops to near $60.00 as US-China trade dispute continues to weigh on energy demand
- WTI declined by over 1% as the prolonged US-China trade conflict continues to weigh on energy demand.
- The IEA has adjusted its 2025 global Oil demand forecast, projecting the slowest growth rate in five years.
- Heightened trade uncertainty has led several banks, including UBS, BNP Paribas, and HSBC, to lower their crude oil price forecasts.
West Texas Intermediate (WTI) Oil price continues its decline for the third consecutive session, losing over 1.00% and trading near $60.30 per barrel during early European hours on Wednesday. The drop in crude Oil prices reflects growing uncertainty caused by shifts in US tariff policies, as traders assess the economic ramifications of the ongoing US-China trade conflict and its potential impact on energy demand.
On Tuesday, the International Energy Agency (IEA) revised its 2025 global Oil demand forecast, predicting the slowest growth rate in five years. The IEA also noted that US production growth is expected to slow due to tariffs introduced by US President Donald Trump and the retaliatory actions of trade partners. Additionally, the agency warned that the global oversupply of Oil could persist until 2026.
The combination of escalating tariffs and increased output from OPEC+—a coalition of the Organization of the Petroleum Exporting Countries and its allies—has already driven Oil prices down approximately 13% this month. Trade-related uncertainty has prompted several banks, including UBS, BNP Paribas, and HSBC, to revise their crude Oil price projections downward.
Further complicating the outlook, OPEC+ continues to raise production levels, while progress in US-Iran nuclear discussions could lead to increased Iranian oil exports. Meanwhile, President Trump’s investigation into critical mineral tariffs may strain relations with key suppliers such as China, exacerbating concerns about economic growth and its effects on Oil demand.
Meanwhile, the American Petroleum Institute (API) reported an unexpected rise of 2.4 million barrels in last week’s US crude Oil stock, contrasting with the anticipated decrease of 1.68 million barrels and the previous week's decline of 1.057 million barrels.
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.
