WTI falls to near $56.50 as oversupply concerns rise ahead of upcoming Trump-Putin meet

WTI declines as President Trump and Putin agree to meet in Hungary to discuss ending the war in Ukraine.
Indian refiners signaled they would scale back Oil imports rather than impose a complete halt.
EIA Crude Oil Stocks Change reported a 3.524 million-barrel rise last week, far above expectations of 0.12 million.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) Oil price extended its losses and recorded a fresh five-month low of $56.52 during the Asian hours on Friday, currently trading around $56.70 per barrel. Crude Oil prices depreciate amid rising concerns over global energy supplies.

United States (US) President Donald Trump and Russian President Vladimir Putin agreed to meet in Hungary to discuss ending the war in Ukraine, a move that could ease restrictions on Russian Oil and increase global supply. The development came as Ukrainian President Volodymyr Zelenskiy is set to meet President Trump at the White House on Friday to seek additional military aid, including US-made long-range Tomahawk missiles.

Washington also called on India and China to stop importing crude Oil from Russia. However, Indian refiners indicated they would scale back Oil imports rather than a complete halt, pending guidance from New Delhi, after Trump announced that the country would cease purchases.

Oil prices also received downward pressure after the Energy Information Administration (EIA) reported on Thursday that US crude inventories increased by 3.524 million barrels last week, compared to market expectations of 0.12 million barrels. The larger-than-expected increase in crude inventories was mainly driven by reduced refinery utilization as facilities entered their fall maintenance period.

Traders adopt caution amid escalating trade tensions between the United States (US) and China, the world’s two largest economies. US Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent criticized China’s plans to restrict rare earth exports, calling them “economic coercion” and “a global supply chain power grab.” Bessent warned, “If China wants to be an unreliable partner to the world, then the world will have to decouple,” per BBC.

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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.

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