WTI falls below $70.00 amid worries about US economy, Trump tariffs
- WTI price edges lower to around $69.00 in Wednesday's early Asian session.
- Worries about Trump's push for trade tariffs weigh on the WTI price.
- Crude oil inventories in the US fell by 640,000 barrels last week, according to the API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.00 during the early Asian session on Wednesday. The WTI price faces some selling pressure to a two-month low amid the fears of slower energy demand and worries about US President Donald Trump's tariffs.
Analysts said Trump's stated plans for higher tariffs have raised inflation worries at the US Federal Reserve (Fed). This might convince the US central bank to keep interest rates higher, which in turn could slow economic growth and energy demand. On Monday, Trump said that sweeping US tariffs on imports from Canada and Mexico “will go forward” when a month-long delay on their implementation expires next week.
The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the United States for the week ending February 21 declined by 640,000 barrels, compared to a rise of 3.34 million barrels in the previous week. The market consensus estimated that stocks would increase by 2.3 million barrels.
Additionally, the possible peace talks on the Russia-Ukraine war might cap the upside for the WTI price. “Also weighing on oil prices was the possibility of a peace deal between Russia and Ukraine that foreshadows the lifting of Russian sanctions, potentially welcoming unfettered Russian supply back to the market," said Tamas Varga at oil broker PVM.
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.