WTI inches higher to near $67.50 despite rising global demand concerns
- WTI price may face challenges amid rising global demand concerns following Trump’s tariffs.
- Trump’s new letters detail individual tariff rates ranging from 20% to 50% on eight countries, taking effect starting August 1.
- EIA Crude Oil Stocks Change reported a 7.07 million-barrel increase for previous week, against expectations of a 2.0 million-barrel decline.
West Texas Intermediate (WTI) Oil price extends its winning streak for the fourth consecutive day, trading around $67.40 per barrel during the early European hours on Thursday. However, crude Oil prices may face challenges amid rising global demand concerns, driven by the potential impact of US President Donald Trump's tariffs on global economic growth.
President Trump unveiled on Wednesday a new round of tariff demand letters, including a 50% rate on Brazil, a 30% rate on Algeria, Libya, Iraq, and Sri Lanka, and a 20% rate on goods from the Philippines, are set to hit in August, per Bloomberg.
Additionally, the Energy Information Administration (EIA) reported a 7.07 million-barrel increase in crude inventories for the week ending on July 4, against market expectations of a 2.0 million-barrel decline. This follows a previous build of 3.845 million barrels. However, distillate and gasoline inventories declined, with the latter indicating strong demand.
Meanwhile, the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, is preparing for another significant output increase in September, as eight members begin phasing out voluntary cuts and the United Arab Emirates (UAE) shifts to a higher production quota. Despite the expected rise in supply, the UAE emphasized that inventories are not accumulating, indicating that demand remains robust.
The latest Federal Open Market Committee (FOMC) Minutes from the June 17–18 meeting, released on Wednesday, indicated that only a few Federal Reserve (Fed) officials considered a reduction in the fed funds rate likely to be appropriate at some point this year. Higher interest rates make borrowing more expensive in the United States, the world’s largest Oil consumer, which reduces demand for crude.
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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