WTI rises to near $71.50 amid increasing fuel demand
- WTI price edges higher as a JPMorgan report reveals global Oil demand has risen to 103.4 million barrels per day.
- President Trump has instructed officials to review reciprocal tariffs on countries imposing tariffs on US goods.
- Oil prices may face downward pressure due to a possible relaxation of restrictions on Russian producers.
West Texas Intermediate (WTI) crude Oil price extends its gains for the second successive day, trading around $71.50 per barrel during early European hours on Friday. Oil prices find support from increasing fuel demand and a delay in US tariff plans.
According to a report by JPMorgan on Friday, global Oil demand has risen to 103.4 million barrels per day, marking a 1.4 million bpd increase year-over-year. "After a slow start, demand for mobility and heating fuels picked up in the second week of February, suggesting the gap between actual and projected demand will soon close," the report noted.
On Thursday, US President Donald Trump directed commerce and economic officials to study reciprocal tariffs against countries imposing tariffs on US goods, with recommendations due by April 1. This delay allows for negotiations, potentially reducing trade tensions.
However, the upside of the Oil prices was limited amid easing supply risks and speculation over a potential relaxation of restrictions on Russian producers. This follows Trump’s directive for US officials to initiate peace talks after Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed interest in ending the conflict in separate phone calls with him.
Dollar-denominated crude Oil may face demand concerns from the United States (US), the world’s largest Oil consumer, as rising inflation strengthens expectations that the Federal Reserve (Fed) will maintain its hawkish policy stance.
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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