WTI edges higher to near $61.50 as US, China reach preliminary trade deal
- WTI price drifts higher to near $61.45 in Monday’s Asian session.
- Optimism between the US-China trade talks boosts the outlook for energy demand and lifts the WTI price.
- Traders brace for the API weekly crude oil stock report on Tuesday ahead of the Trump-Xi Jinping meeting.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.45 during the Asian trading hours on Monday. The WTI edges higher as progress between the US and China on trade talks boosts the outlook for oil demand. The American Petroleum Institute (API) weekly crude oil stock report will be released on Tuesday.
The US and China reached a preliminary agreement that would prevent a new round of tariffs and keep critical rare earth mineral supplies flowing to the US from China. US President Donald Trump will meet Chinese President Xi Jinping later on Thursday to decide on the framework of a trade deal. Positive developments to defuse trade tensions that have rattled global markets would be a positive for global economic growth and boost the WTI price.
“Hope of an imminent US-China trade deal is a plus for economic and oil-demand sentiment — it is layering in top of the Russia risk premium this morning,” said Vandana Hari, founder of Singapore-based market analysis firm Vanda Insights.
Last week, Trump hit Russia's Rosneft and Lukoil with sanctions to pressure Russian President Vladimir Putin to end the Ukraine war. The two companies account for more than 5% of global oil production, with Russia ranking as the world's second-largest crude oil producer in 2024, behind the United States. Sanctions on Russia could limit its crude exports to global markets, raising concerns about tighter global supply and pushing the WTI price higher.
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.
Nonetheless, concerns over excess supply might cap the upside for the black gold. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have pushed ahead with plans to increase oil supply. This has led analysts to predict a surplus of crude this year and next year.
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