WTI wobbles around $66 as Trump’s tariff deadline looms large
- WTI trades with caution around $66.00 as investors struggle to evaluate the global outlook post July 9 tariff deadline.
- US President Trump confirmed that he will not extend the tariff deadline.
- Traders pare bets supporting Fed’s interest rate cuts in the policy meeting later this month.
West Texas Intermediate (WTI), futures on NYMEX, trades cautiously near $66.00 during the European trading session on Friday. The Oil price struggles to hold its recent recovery from the weekly low of $64.00 as investors turn cautious regarding the energy demand post the imposition of reciprocal tariffs by United States (US) President Donald Trump, following the deadline on July 9.
US President Trump said late last week that he will not extend the tariff deadline for those countries that fail to strike a deal with Washington during the 90-day pause. I don’t think I’ll need to,” Trump said in an interview with Fox Business.
Meanwhile, Donald Trump has also stated that he will send letters to those nations whose government has not struck a deal with Washington yet, outlining additional tariff rates, by Friday.
So far, Washington has announced trade agreements with the United Kingdom (UK) and Vietnam and a framework with China, and has expressed confidence that it will strike a deal with India before the tariff deadline.
The imposition of reciprocal tariffs by the US on its major trading partners, such as the Eurozone, Japan, Canada, and Mexico, will dampen global trade stability. A scenario that will diminish the global oil demand.
Meanwhile, a decline in traders’ bets supporting interest rate cuts by the Federal Reserve (Fed) in the policy meeting later this month, after the release of the upbeat US Nonfarm Payrolls (NFP) data for June has also capped the Oil price’s upside.
According to the CME FedWatch tool, the probability of the Fed cutting interest rates in July has decreased to 4.7% from 23.8% seen a day prior to the US NFP data release.
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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