WTI extends gains above $58.00 on hopes of a US-China deal
- WTI Oil prices extend their recovery to the mid-range of the $58.00s.
- Hopes of a trade deal between US and China have eased oversupply fears.
- Trump says he reached a deal with India's President Modi to reduce purchases of Russian Oil.
Crude prices are trading higher for the second consecutive day on Wednesday. The US benchmark West Texas Intermediate Oil is nearly $2.5 up from Monday’s lows, changing at $58.40 per barrel at the time of writing, supported by hopes that a trade deal between the US and China will improve global demand.
US President Donald Trump soothed markets on Monday, announcing plans to meet Chinese Premier Xi Jinping next week. US Treasury Secretary Scot Bessent and China’0s Vice Premier He Lifeng are expected to meet in Malaysia later this week to prepare the Trump-Xi summit.
Trump also affirmed that he has signed a deal to reduce import taxes on Indian products to 15% to 16% from the current 50% in exchange for reducing their purchases of Russian Oil.
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Data released on Tuesday by the American Petroleum Institute revealed that Oil stocks declined by 3 million barrels in the week of October 17 for the first time in the last four weeks, which provided additional support for Crude prices.
From a wider perspective, however, Oil prices remain near the multi-year lows in the area of $55.00 hit in April and May, as the soft economic outlook of the world’s major economies and expectations of further supply hikes by Oil producers have boosted market concerns of an Oil glut.
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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