WTI climbs to near $62.00 amid renewed trade tensions
- WTI price drifts higher to $61.90 in Monday’s Asian session, adding 2.70% on the day.
- Persistent tariff uncertainty continues to weigh on the INR.
- OPEC+ decided to raise output by 411,000 bpd in July, the third straight month of the same hike.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.90 during the Asian trading hours on Monday. The WTI price jumps due to ongoing tariff uncertainty and the persistent geopolitical tensions in the Middle East.
US President Donald Trump’s tariffs raised concerns about global economic weakness, which might drag the price of black gold lower. Trump claimed on Friday that China had violated their trade agreement. Investors will closely monitor the developments surrounding US-China trade talks as US Treasury Secretary Scott Bessent said on Sunday that Trump and Chinese President Xi Jinping are likely to speak soon to iron out trade issues including a dispute over critical minerals.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced Saturday that it will increase oil output by 411,000 barrels a day (bpd) in July, following an increase in May and June. OPEC+ noted in a statement that a “steady global economic outlook and current healthy market fundamentals, as reflected in the low oil inventories” was its reasoning for the July increase. Analysts said an increased supply might weigh on crude prices, squeezing all producers, but some more than others, including a key group of rivals - US shale producers.
Oil traders await the release of the US May ISM Manufacturing Purchasing Managers' Index (PMI) report, which is due later on Monday. In case of a stronger-than-expected outcome, this could lift the Greenback and undermine the USD-denominated WTI price.
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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