WTI falls toward $69.00 as traders assess the impact of Trump auto tariffs
- WTI declines as markets evaluate the impact of US President Donald Trump's auto tariffs.
- India’s Reliance Industries, the world’s largest Oil refinery, is reportedly planning to halt Venezuelan oil imports.
- President Trump has signed an order imposing a 25% tariff on auto imports, further intensifying global trade tensions.
West Texas Intermediate (WTI) crude Oil price halts its three-day rally, trading around $69.20 per barrel during European hours on Thursday. Crude prices edge lower as markets assess the impact of US President Donald Trump's auto tariffs, alongside ongoing concerns over global supply disruptions due to US sanctions on buyers of Venezuelan and Iranian Oil.
In response to the latest US tariff announcement, India’s Reliance Industries, operator of the world's largest refining complex, reportedly plans to halt Venezuelan Oil imports, further amplifying concerns over global supply stability.
President Trump signed an order imposing a 25% tariff on auto imports, further escalating global trade tensions. The tariffs are set to take effect on April 2, with collection beginning the following day. Despite this, some analysts believe the tariffs could indirectly support Oil prices.
Reuters cited Tony Sycamore, a market analyst at IG, who suggested that "the rise in new car prices from tariffs will slow the shift to newer, more fuel-efficient models," potentially sustaining demand for crude Oil.
On Wednesday, Oil prices gained around 1%, driven by signs of strong demand and tightening global supply. The US Energy Information Administration (EIA) reported that crude stockpiles fell by 3.34 million barrels last week—the largest decline since December—while gasoline inventories also dropped.
US agreements with Russia and Ukraine, which could lead to a potential easing of US sanctions on Russian Oil, have put downward pressure on Crude prices. Additionally, concerns over a possible OPEC+ (Organization of the Petroleum Exporting Countries and its allies) supply increase in May may slightly weigh on the market. Meanwhile, Iraq is planning to expand its oil production capacity beyond 6 million barrels per day (bpd) by 2029.
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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