WTI languishes near $72.00 mark, 100-day SMA holds the key for bulls
- WTI drifts lower for the second consecutive day and remains close to a one-month trough.
- Trump’s decision to delay tariffs eases worries about supply disruption and exerts pressure.
- The OPEC+ remains committed to gradually phase-out of production cuts, lending support.
West Texas Intermediate (WTI) US Crude Oil prices extend the previous day's retracement slide from a one-week top and attract sellers for the second successive day on Tuesday. The commodity currently trades around the $72.00 mark, near a one-month low touched last week and just above the 100-day Simple Moving Average (SMA) support.
US President Donald Trump announced a one-month delay on newly imposed tariffs on imports from Canada and Mexico. This eases worries over potential supply disruptions from two of the primary oil suppliers to the US and weighs on Crude Oil prices. Furthermore, the prospects of lower fuel demand – led by the anticipated domino effect from Trump's policies on global economic growth – turn out to be another factor exerting downward pressure on the black liquid.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) resisted calls from Trump to increase output to lower prices and maintained their current oil production plans. This could act as a tailwind for Crude Oil prices and help limit deeper losses. Hence, it will be prudent to wait for a sustained break below the 100-day SMA, currently pegged near the $71.00 mark, before positioning for an extension of the recent pullback from a multi-month high.
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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