WTI rises above $58.00, trade uncertainty caps gains
- WTI price gains ground due to a decline in US crude inventories.
- Oil prices may lose ground due to lingering uncertainty surrounding US-China trade talks.
- Fed Chair Powell signaled a more cautious stance on interest rate decisions, citing continued policy uncertainty.
West Texas Intermediate (WTI) crude Oil price recovers some ground during Thursday’s Asian session, trading around $58.10 per barrel after recent losses. The rebound is supported by a decline in US crude inventories. According to the latest EIA Petroleum Status Report, US crude stockpiles fell by 2.032 million barrels in the week ending May 2.
However, Oil prices remain under pressure due to lingering uncertainty surrounding US-China trade talks. As the world’s two largest oil consumers, tensions between them continue to weigh on market sentiment. US Treasury Secretary Scott Bessent is scheduled to meet China’s top economic official on May 10 in Switzerland in an attempt to revive stalled negotiations.
US President Donald Trump, meanwhile, claimed China initiated the talks and reiterated his unwillingness to reduce tariffs to bring Beijing to the table. Bessent tempered expectations, describing the meeting as an initial step rather than an advanced phase of negotiation.
Despite mutual willingness to engage, acknowledged by China’s Ministry of Commerce, investors remain cautious. The trade conflict threatens to dampen global Oil demand, with Brent crude edging higher on optimism about possible progress, extending Wednesday’s relief rally. Still, ING analysts Ewa Manthey and Warren Patterson emphasized that meaningful progress on tariff reductions is essential to lifting the Oil demand outlook.
Further dampening sentiment, Federal Reserve Chair Jerome Powell warned that prolonged tariff policies could hinder the Fed’s inflation and employment goals. He signaled a more cautious stance on interest rate decisions, citing continued policy uncertainty. While trade tensions under the Trump administration have previously undermined business and consumer confidence, the Fed sees no urgent need for rate changes in the absence of more pronounced economic weakness.
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.
