WTI rises toward $66.00, gains seem limited amid tariff concerns, economic slowdown fears
- WTI price could lose ground as tariff concerns could slow economic growth.
- President Donald Trump referred to the economy as being in a "transition period," hinting at a potential slowdown.
- Oil demand concerns rise due to deepening deflationary pressures in China, the world’s top Oil importer.
West Texas Intermediate (WTI) Oil price edges higher on Tuesday, trading around $65.90 per barrel during early European hours after experiencing losses in the previous session. However, crude Oil prices faced headwinds amid concerns that United States (US) tariffs could slow economic growth and reduce Oil demand.
Tariffs imposed—and later delayed—by US President Donald Trump on major oil suppliers, including Canada and Mexico, along with China’s retaliatory measures, have raised fears of a global economic slowdown. Both China and Canada have responded with their tariffs.
Ontario’s Premier Doug Ford announced that starting Monday, electricity prices for 1.5 million American homes and businesses will rise by 25% in retaliation for Trump’s trade policies. Meanwhile, China implemented retaliatory tariffs of up to 15% on select US agricultural products on Monday, following last week’s US tariff hike from 10% to 20% on Chinese imports.
Additionally, President Trump characterized the economy as being in a "transition period," hinting at a potential slowdown. Investors took his remarks as an early signal of possible economic turbulence in the near future.
Economic weakness in China, the world’s top Oil importer, further pressured crude prices. Recent data suggested deepening deflationary pressures despite government stimulus efforts, with February marking the sharpest decline in consumer prices in 13 months and the 29th consecutive monthly drop in factory-gate prices.
Russian Deputy Prime Minister Alexander Novak announced on Friday that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, had agreed to start increasing Oil production in April. However, he cautioned that the decision could be reversed if market imbalances arise.
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.
