WTI gains traction to near $65.00 as US-EU confirm 15% tariff deal
- WTI price drifts higher to near $64.90 in Monday’s Asian session.
- Optimism over the US-EU trade deal underpins the WTI price.
- Growing surplus fears might cap the WTI’s upside.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.90 during the Asian trading hours on Monday. The WTI edges higher as the European Union (EU) agrees to the United States (US) trade deal ahead of the deadline. Traders will keep an eye on the American Petroleum Institute (API) weekly crude oil stock report, due later on Tuesday.
The WTI price climbs after the US and EU agreed on a trade deal that sets a blanket 15% tariff on goods traded between them ahead of US President Donald Trump’s tariff deadline of August 1. The 15% tariff rates will take effect on August 1. Easing fears that Trump’s tariff policies will impact global economic growth and oil demand might support the black gold in the near term.
US and Chinese officials are set to meet on Monday for trade talks, and the South China Morning Post reported on Sunday that both countries are expected to extend their tariff truce. These positive developments might contribute to the WTI’s upside as the US and China are the world’s largest oil consumers.
On the other hand, concerns over an impending supply glut could weigh on the WTI. The International Energy Agency (IEA) and the US Energy Information Administration (EIA) forecast a surplus of oil next year, with the IEA projecting a surplus of 2 million barrels a day, the largest surplus since the pandemic.
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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