WTI remains below $57.00 due to oversupply, demand concerns
- WTI price loses ground due to persistent bearish sentiment as record-high volumes of crude stored at sea.
- Oil prices struggle due to the ongoing uncertainties surrounding the US-China trade tensions.
- Trump warned that India could face “massive” tariffs unless it ceases buying Russian crude.
West Texas Intermediate (WTI) Oil price remains subdued for the second successive session, trading around $56.80 per barrel during the Asian hours on Tuesday. Crude Oil prices struggle due to oversupply concerns; and demand risks are driven by the trade tensions between the United States (US) and China, world’s two largest economies.
The bearish sentiment surrounding the crude Oil prices strengthens as market imbalance widens, driven by record-high volumes of crude stored at sea. As of the week ending October 17, around 1.24 billion barrels of crude and condensate were being transported by tankers, up slightly from the revised total of 1.22 billion barrels the previous week.
US President Donald Trump also said he expects to reach a “fair deal” with China’s President Xi Jinping during their upcoming meeting in South Korea, signaling a possible easing of trade tensions. Disagreements over tariffs, technology, and market access remain unresolved ahead of their scheduled meeting in South Korea next week.
However, US Trade Representative Jamieson Greer adopted a tougher stance, accusing Beijing of engaging in a “broader pattern of economic coercion” targeting companies making strategic investments in critical US industries.
Rosneft-controlled Novokuibyshevsk refinery in Russia’s Volga region halted crude processing on Sunday after a drone attack. Another strike on the Orenburg gas plant prompted neighboring Kazakhstan to reduce output at its Karachaganak oil and gas condensate field by 25% to 30%.
Oil prices may receive support amid uncertainty around the Russian crude supply. Trump reiterated that India could face “massive” tariffs if it does not stop purchasing Russian crude. India has emerged as the largest buyer of discounted Russian oil following Western sanctions on Moscow, per 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.
