WTI rallies further, approaching $63.00 boosted by a ban on tariffs
- Oil prices rally after a US court blocked Trump’s trade tariffs
- Declining Crude stocks in the US have provided additional support to prices.
- Investors remain wary that OPEC+ countries might decide to hike output on Saturday.
WTI Oil prices accelerated their recovery on Thursday, as a US court ruling against Trump’s tariffs boosted hopes for some normalisation in global trade, which will support crude demand.
The US Court for International Trade ruled on Wednesday that Trump’s unilateral trade tariffs overstep the US Congress’s authority and have blocked the levies imposed after April’s “Liberation Day”.
Before that, a report by the American Petroleum Institute (API) revealed that US Crude stocks fell by 4,236 million barrels last week, following a 2,499 increase in the previous week, providing additional support for prices.
The US Government has appealed the sentence, putting the court’s authority into question. This process is likely to draw out long, which might dampen investors’ enthusiasm at some point.
Beyond that, investors remain wary about a likely decision by OPEC+ countries to hike output after their May 31 meeting. This would bring oversupply fears back to the table, adding bearish pressure on prices.
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
Guillermo Alcala
FXStreet
Graduated in Communication Sciences at the Universidad del Pais Vasco and Universiteit van Amsterdam, Guillermo has been working as financial news editor and copywriter in diverse Forex-related firms, like FXStreet and Kantox.
