WTI edges higher above $67.00 on heightened geopolitical risks
- WTI price drifts higher to near $67.30 in Tuesday’s early Asian session.
- Geopolitical risks and China's plans to boost consumption support the WTI price.
- Concerns over the impact of Trump’s tariff policies might cap the WTI’s upside.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $67.30 during the early Asian session on Tuesday. The WTI price extends the rally as the United States (US) vows to continue attacks on Houthis.
The Houthis announced on Sunday that they launched an attack comprising 18 ballistic and cruise missiles as well as drones, targeting the USS Harry S Truman aircraft carrier and its accompanying warships in the northern Red Sea. A Houthi military spokesman said that the attack was in reaction to US airstrikes authorized by Trump against rebel-controlled areas in Yemen, including the capital Sanaa and the province of Saada, which borders Saudi Arabia.
US President Donald Trump said on Monday he would hold Iran responsible for any attacks carried out by the Houthi group that it backs in Yemen. This comes as Trump’s administration expanded the largest military operation in the Middle East since his return to the White House. The Red Sea disturbance has caused an increase in energy transportation prices and the WTI price, as oil and gas cargo shipments were forced to take longer routes.
A slew of positive Chinese economic data as well as a special plan from Chinese officials to boost domestic consumption contribute to the WTI’s upside. On Sunday, China launched special initiatives to boost consumption and raise incomes Other measures include stabilizing the stock and property markets. China’s Retail Sales rose 4% in the first two months of this year, compared to a 3.7% increase in December.
On the other hand, darkened economic outlooks amid an escalating global trade war from Trump's protectionist trade policies could exert some selling pressure on the black gold. Trump's aggressive tariffs on imports are expected to raise prices for businesses, boost inflation and undermine consumer confidence in a blow to economic growth.
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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