- WTI price depreciates due to weaker market sentiment following the ruling allowing Trump tariffs from taking effect.
- OPEC+ may decide on a July Oil production hike on Saturday.
- EIA Crude Oil Stocks Change showed a 2.8-million-barrel decline in the previous week.
West Texas Intermediate (WTI) Oil price extends its losses for the second successive session, trading around $60.30 per barrel during the Asian hours on Friday. Crude Oil prices struggle on dampened market sentiment after the US Court of Appeals for the Federal Circuit in Washington temporarily allowed the most sweeping of President Donald Trump's tariffs on Thursday.
On Wednesday, a three-judge panel at the Court of International Trade in Manhattan halted US President Donald Trump from imposing "Liberation Day" tariffs from taking effect. The federal court found that Trump exceeded his authority in imposing broad import tariffs and declared the executive orders issued on April 2 unlawful.
The OPEC+ group, Members of the Organization of the Petroleum Exporting Countries and its allies, is expected to meet on Saturday to decide on a July oil production hike. The group is also trying to ensure that countries exceeding their agreed production, such as Kazakhstan, cut their output.
Moreover, the demand outlook for crude Oil was also hit by the contraction in the United States (US) economy. The preliminary Gross Domestic Product Annualized contracted by 0.2% in the first quarter, slightly better than the expected decline of 0.3%.
However, Energy Information Administration (EIA) Crude Oil Stocks Change showed a surprise 2.8-million-barrel draw in US crude inventories for the week ending on May 23, driven by strong seasonal demand.
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.
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