WTI price slumps to near $65.75 in Friday’s early Asian session.
Oversupply concerns, huge crude stock inventory in the US and tariff threats weigh on the WTI price.
Escalating geopolitical tensions in the Middle East might help limit the oil price’s losses.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.75 during the early Asian trading hours on Friday. The WTI price tumbles amid concerns about a supply hike for August by OPEC+, a surprise increase in US crude inventories, and intensifying US tariff pressures.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) agreed at a July 6 meeting to hike their collective crude production by 548,000 barrels per day (bpd), as they continue to unwind a set of voluntary supply cuts. The group previously announced hikes of 411,000 bpd for May, June, and July, already three times faster than scheduled. Oversized output hikes have raised concerns about oversupply, which could weigh on the WTI price in the near term.
Furthermore, a huge crude stock inventory in the US might contribute to the WTI’s downside. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending July 4 rose by 7.070 million barrels, compared to an increase of 3.835 million barrels in the previous week. The market consensus estimated that stocks would decrease by 2 million barrels.
US President Donald Trump on Wednesday also announced plans for tariffs on copper, semiconductors and pharmaceuticals. Trump also imposed a 50% tariff rate on Brazil, one of the highest so far announced for the levies, which will take effect in August. Intensifying US tariff pressures could undermine the price of black gold, as tariffs can lead to trade wars, slowing down global trade and economic activity.
On the other hand, the geopolitical risks in the Middle East might cap the downside for WTI. Reuters reported that four members of the 25-member crew were killed in the Houthi attacks. Eleven people were still missing, with six of them suspected to have been kidnapped by the Houthis.
* The content presented above, whether from a third party or not, is considered as general advice only. This article should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments.
