WTI remains below $67.50 as escalating trade tensions overshadow potential demand boost
- WTI price holds losses as global trade tensions escalate following President Trump’s renewed tariff threats.
- OPEC+ struggles to enforce production targets amid a surge in February crude output, driven primarily by Kazakhstan.
- US gasoline inventories plummeted by 5.7 million barrels, surpassing analysts' expectations of a 1.9 million-barrel decline.
West Texas Intermediate (WTI) crude Oil price remains subdued after two days of gains, trading around $67.40 per barrel during early European hours on Thursday. However, crude Oil could face headwinds as traders shift their focus to escalating global trade tensions.
US President Donald Trump threatened additional tariffs in response to the European Union’s (EU) retaliatory measures against the United States (US). After the US imposed a 25% tariff on European steel and aluminum, the EU countered with tariffs on €26 billion worth of US goods in April. Trump's aggressive stance on tariffs has unsettled investors, weakened consumer and business confidence, and heightened fears of a US recession.
Oil prices may also face downward pressure after the Organization of the Petroleum Exporting Countries (OPEC) reported a significant rise in February crude output, led by Kazakhstan. This increase highlights challenges for OPEC+ in maintaining adherence to agreed production targets, according to Reuters.
On the other hand, Oil found support on Wednesday as US data pointed to strong domestic demand and slowing inflation, easing investor concerns. Government figures showed US gasoline inventories dropped by 5.7 million barrels—far exceeding analysts' expectations of a 1.9 million-barrel decline—while distillate stocks also fell more than anticipated. This sharp decrease in gasoline inventories bolstered expectations for a seasonal demand surge in spring.
According to Reuters, JP Morgan analysts highlighted signs of robust US demand, along with Ukraine’s deployment of 377 drones targeting Russian energy infrastructure and military sites, as factors supporting Oil prices. "As of March 11, global Oil demand averaged 102.2 million barrels per day, growing by 1.7 million barrels per day year-over-year and exceeding our projected monthly increase by 60,000 barrels per day," they noted.
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.
