WTI hovers around $64.50, upside appears as potential US-China deal improves energy demand
- WTI price may appreciate as easing US-China tariff tensions improve energy demand.
- US and Chinese advisors are set to meet again to reach a final trade deal.
- Iran would present a counter-proposal for a nuclear deal to the US.
West Texas Intermediate (WTI) Oil price remains steady at around $64.50 per barrel during the early European hours on Tuesday. Crude Oil prices may continue their winning streak for the fourth successive day, as a potential trade deal between the US and China eases tariff tensions, which dampened energy demands.
On Tuesday at 10.00 a.m. in London, US and Chinese advisors are set to continue meeting on a second day. Trade talks will continue as the world’s two largest economies look to expand from tariffs to rare earth elements curbs, global supply chain disruptions and slower growth.
Treasury Secretary Scott Bessent said that Monday’s meeting was good. Meanwhile, Commerce Secretary Howard Lutnick noted them as “fruitful,” increasing expectations of progress in improving relations between the two countries.
Iran would offer a counter-proposal for a nuclear deal to the US, while President Trump said that he is not ready to allow Iran to continue its uranium enrichment activities. However, easing of US sanctions on Iran, the third largest producer among members of the Organization of the Petroleum Exporting Countries (OPEC), would allow the country to export more Oil, putting downward pressure on the global crude prices.
OPEC+, including OPEC members and allies such as Russia, plans to scale back its latest round of production cuts. "The prospect of further hikes in OPEC supply continues to hang over the market," Daniel Hynes, senior commodity strategist at ANZ, said in a note cited by Reuters.
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.
