WTI moves above $64.50 due to odds of Saudi Arabia raising August Oil prices for Asia
- WTI price gains ground as Saudi Arabia may increase its August crude Oil prices for Asian buyers.
- Oil prices rise due to news of Trump’s trade officials scaling back their tariff deal goals.
- The upcoming US employment data will likely offer fresh insights into the Fed's interest rate decision in July.
West Texas Intermediate (WTI) Oil price gains ground for the second successive session, trading around $64.60 during the European hours on Tuesday. Crude prices gain ground as the world's biggest Oil exporter, Saudi Arabia, is expected to raise its August crude Oil prices for Asian buyers to the highest in four months.
The Reuters survey cited five sources, saying that the August Official Selling Price (OSP) for Arab Light crude may increase by 50-80 cents to between $1.70 and $2 a barrel from the previous month. This increase could be attributed to the rise in Oil prices during the Middle East conflict and to a solid summer fuel demand.
Additionally, Oil prices receive support from improved market sentiment following the news that the US President Donald Trump’s top trade officials are scaling back their goals for broad reciprocal agreements with trading partners. The US officials were seeking phased deals with the most engaged countries as they pushed on to reach an agreement by the July 9 deadline, when Trump had vowed to reimpose his harshest levies, according to four people familiar with the discussions, cited by the Financial Times.
However, the upside of the Oil prices could be restrained amid increasing interest-rate uncertainty in the United States (US), given the biggest Oil consumer. According to the White House, US President Donald Trump has formally raised complaints about high interest rates to Federal Reserve (Fed) Chair Jerome Powell, criticizing Powell as being “too late.” This renewed pressure, along with the tariff-driven impacts on near-term core inflation, makes it difficult for the US Federal Reserve (Fed) to move forward with rate cuts.
Traders adopt caution over a sweeping tax and spending bill currently under consideration in the Senate, which could add $3.3 trillion to the national debt. US President Donald Trump posted on Truth Social on Monday, “One great big beautiful bill is moving along nicely!” The Trump Administration has gotten costs down, very substantially, for the American Consumer. There has never been anything like this!
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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