WTI remains above $62.00, downside risks persist due to potential increase in OPEC+ supply
- WTI price may come under pressure as investors evaluate the potential for an accelerated output increase by OPEC+.
- Kazakhstan, an OPEC+ member, has indicated it cannot cut production from its major Oil fields and will prioritize national interests.
- The downside of the Oil prices could be limited amid renewed optimism over potential US-China trade talks.
West Texas Intermediate (WTI) Oil price recovers its daily losses, trading around $62.20 per barrel during Thursday’s Asian hours. However, crude Oil prices face headwinds as investors assess the likelihood of an accelerated output increase from OPEC+, the Organization of the Petroleum Exporting Countries and its allies.
Oil prices dropped over 2% on Wednesday following a Reuters report suggesting that several OPEC+ members plan to propose boosting production again in June. Kazakhstan, a key OPEC+ ally, stated it cannot reduce output from its major Oil fields and will prioritize national interests in its production strategy.
Despite the downward pressure, crude prices found some support on hopes of renewed US-China trade negotiations. According to the Wall Street Journal, the White House may reduce tariffs on Chinese goods by up to 50% to facilitate talks.
US Treasury Secretary Scott Bessent acknowledged that current tariffs—145% on Chinese goods and 125% on US goods—are unsustainable and must be lowered for meaningful dialogue to begin. Meanwhile, National Economic Council Director Kevin Hassett cautioned that a comprehensive trade deal could take two to three years.
US President Donald Trump emphasized that tariff adjustments depend on China’s willingness to engage. "If we don't reach a deal, we're simply setting the price — then it's up to them to decide if they want to proceed," he said, adding that the current 145% rate remains in effect due to a lack of trade activity with China.
Elsewhere, market watchers are monitoring US-Iran talks set for the weekend, which could impact global supply if progress is made on limiting Iran's uranium enrichment. However, optimism was dampened after the US imposed new sanctions on Iran’s energy sector, prompting Tehran to accuse Washington of lacking seriousness in negotiations.
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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