WTI drifts higher above $64.50 on US-China trade talk hopes
- WTI price edges higher to around $64.65 in Tuesday’s Asian session.
- Hopes sparked by US-China trade talks and geopolitical risks support the WTI price.
- OPEC and its partners have agreed to expand short-term oil production.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.65 during the Asian trading hours on Tuesday. The WTI price climbs to nearly seven-week highs, bolstered by a potential trade deal and a weaker US Dollar (USD). Investors await news from US-China trade talks in London for fresh impetus.
Investors are optimistic about the negotiations between the US and China, even though no significant breakthroughs were announced after the first day of talks. US President Donald Trump said that the talks “should go very well.” Oil traders are hopeful of a positive outcome from negotiation, which might support the global economic outlook and boost oil demand. This, in turn, could underpin the WTI price.
Furthermore, persistent geopolitical tensions in the Middle East and the ongoing Russia-Ukraine war could lift demand for crude oil. Early Tuesday, Kyiv and Odesa came under another mass Russian attack, involving ballistic missiles and drones. Explosions were heard across the capital as air defense systems engaged the targets.
On the other hand, the latest move by the Organization of the Petroleum Exporting Countries (OPEC) might cap the upside for the WTI. OPEC and its partners have agreed to expand short-term oil production, with a planned boost of 411,000 barrels per day in July now set to weigh on global prices.
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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