WTI consolidates below $69.00; traders seem non-committed amid mixed cues
- WTI meets with some supply during the Asian session, though it lacks follow-through.
- Worries about the economic fallout from Trump’s tariffs cap the upside for the commodity.
- Geopolitical risks should act as a tailwind for the black liquid amid a broadly weaker USD.
West Texas Intermediate (WTI) US Crude Oil prices attract some sellers following an Asian session uptick to mid-$69.00s, albeit the downtick lacks bearish conviction. The commodity currently trades around the $68.80 region, nearly unchanged for the day amid mixed fundamental cues, and remains within striking distance of a multi-week high touched last Wednesday.
Concerns that US President Donald Trump's aggressive trade tariffs could weigh on global growth and dent fuel demand act as a headwind for the black liquid. Furthermore, the OPEC+ group is set to begin its program of monthly increases in oil production in April, Moreover, reports suggest that the group will likely continue to raise oil output in May, which turns out to be another factor capping the upside for the commodity.
Meanwhile, Trump warned that he may impose secondary tariffs on buyers of Russian oil if he feels Moscow is blocking his efforts to end the war in Ukraine. Trump also threatened Iran with bombing and secondary tariffs if it did not come to an agreement on the nuclear program. This raises the risk of a potential supply disruption from Russia and Iran, which, in turn, is seen lending some support to Crude Oil prices.
Furthermore, the growing acceptance that the Federal Reserve (Fed) will resume its rate-cutting cycle soon amid a tariff-driven US economic slowdown drags the US Dollar (USD) lower for the third straight day. This might further contribute to limiting the downside for the USD-denominated commodity, making it prudent to wait for strong follow-through selling before confirming that the recent move-up has run out of steam.
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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