WTI trims part of tariffs-inspired losses, finds some support near $69.00 mark
- WTI attracts heavy selling in reaction to Trump’s reciprocal tariffs announcement.
- Wednesday’s bearish EIA report on US Crude inventories further exerts pressure.
- A broadly weaker USD lends some support to Oil prices and limits further losses.
West Texas Intermediate (WTI) US Crude Oil prices extend the previous day's retracement slide from the $72.00 neighborhood, or the highest level since February 21, and attract heavy follow-through selling during the Asian session on Thursday. The commodity, however, finds some support near the $69.00 mark and currently trades around the $69.65 region, still down over 1% for the day.
US President Donald Trump's sweeping reciprocal tariffs fueled concerns that the widening trade war may dent global economic growth and dampen fuel demand. This comes on top of a bearish report published by the US Energy Information Administration (EIA) on Wednesday, which showed US crude inventories rose by a surprisingly large 6.2 million barrels last week. This turns out to be a key factors weighing on Crude Oil prices.
Meanwhile, investors now seem convinced that a tariff-driven US economic slowdown might force the Federal Reserve (Fed) to resume its rate-cutting cycle soon. Furthermore, the anti-risk flow triggers a steep decline in the US Treasury bond yields and drags the US Dollar (USD) closer to a multi-month low touched in March. This, in turn, offers some support to USD-denominated commodities and helps limit losses for Crude Oil prices.
Traders now look forward to the US economic docket – featuring the release of the usual Weekly Jobless Claims and the US ISM Services PMI. The data might influence the USD price dynamics and provide some impetus to the black liquid. The focus, however, will remain glued to trade developments, which should continue to play a key role in influencing the near-term sentiment surrounding Crude Oil prices.
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.