- WTI price extends its downside to around $75.55 in Wednesday’s Asian session.
- Trump's announcement of tariffs and plan to increase US oil and gas output weigh on the WTI price.
- EIA projected a lower oil price in 2025 amid the uncertainties.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $75.55 on Wednesday. The WTI price edges lower as US President Donald Trump weighs imposing tariffs on key trade partners and vowing to increase US oil and gas production.
Trump declared a national energy emergency on Monday and used the authority to rapidly approve new oil, gas, and electricity projects that would normally take years to get permits. This raises the concerns of higher US output in a market widely expected to be oversupplied this year.
Additionally, Trump said that he was considering imposing 25% tariffs on Canada and Mexico while discussing imposing a 10% tariff on goods imported from China on February 1. Tariffs could potentially slow economic growth and exert some selling pressure on black gold.
The US Energy Information Administration (EIA) suggested on Tuesday that Oil prices are expected to decline both this year and next as weak economic activity and energy transition efforts weighed heavily on the US and China. "Strong global growth in production of petroleum and other liquids and slower demand growth put downward pressure on prices," noted EIA economists.
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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