WTI falls to near $66.00 due to concerns over weak US Oil demand
- WTI weakens as rising US crude stockpiles fuel concerns over sluggish domestic demand.
- US EIA Crude Oil Stocks unexpectedly rose by 3.845 million barrels last week, defying expectations of a 2.0 million-barrel drawdown.
- Traders remain cautious amid concerns that the potential reinstatement of US tariffs could dampen fuel demand.
West Texas Intermediate (WTI) Oil price halts its three-day winning streak, trading around $66.00 per barrel during the early European hours on Thursday. Crude Oil prices depreciate as a build in US crude stockpiles increased concerns over weak demand from the United States (US), the world’s largest Oil consumer.
US Crude Oil Stocks Change reported a surprise increase of 3.845 million barrels in the week ended June 27, against market expectations of a 2.0 million-barrel decrease and a previous decline of 5.836M, according to data from the Energy Information Administration (EIA) Petroleum Status Report.
Additionally, Oil prices receive downward pressure from signs of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, such as Russia, known as OPEC+, raising their production by 411,000 barrels per day (bpd) at their meeting this weekend, per Reuters. This output increase will raise the total gain to 1.78 million barrels per day in 2025, equivalent to more than 1.5% of global oil demand.
Traders adopt caution over the possibility of US tariffs being reinstated, which could cause lower fuel demand. Uncertainty increases around US trade policy as the 90-day pause on the implementation of higher tariffs will end on July 9 without any new trade deals with several large trading partners, such as the European Union and Japan.
Moreover, China’s Caixin Services PMI declined to 50.6 in June from 51.1 in May, missing the market forecast of 51.0. The data indicated that service sector activity in the world’s largest oil-importing country grew at its slowest pace in nine months in June, as demand softened and new export orders declined.
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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