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WTI Oil prices rally on US-China trade optimism and declining inventories

  • US–China trade negotiations progress, lifting risk sentiment and supporting Oil gains.
  • The US Energy Information Administration (EIA) released a weekly stockpile report, showing a larger-than-expected reduction in Oil inventories.
  • WTI prices rise above $65.00 as risk sentiment supports increasing demand for Oil.

West Texas Intermediate (WTI) crude oil is rallying on Wednesday, climbing more than 2% intraday as markets react positively to renewed momentum in US–China trade negotiations and a larger-than-expected drop in US crude inventories.

The move was sparked by comments from President Donald Trump, who stated on Truth Social, “Our deal with China is done, subject to final approval with President Xi and me.” 

The announcement triggered a wave of optimism across financial markets, boosting risk appetite and supporting commodities like crude Oil, which are closely tied to global trade and industrial demand.

Adding to the bullish tone, the latest inventory data from the US Energy Information Administration (EIA) showed that crude Oil stockpiles declined by 3.644 million barrels for the week ending June 7. 

This significantly exceeded expectations for a modest 0.1 million barrel increase and followed a prior 4.304 million barrel drawdown, reinforcing signs of tightening supply.

Together, the improving macro backdrop and fundamental support have reignited upside momentum in oil markets, with WTI now trading near $65.50, its highest levels since the beginning of April.

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

Tammy Da Costa, CFTe®

Tammy is an economist and market analyst with a deep passion for financial markets, particularly commodities and geopolitics.

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