- WTI price appreciates as President Trump extends the 50% tariff deadline on imports from the EU.
- Oil attracts buyers amid rising geopolitical tensions in the Middle East.
- Oil prices may struggle as OPEC+ could decide to raise output by another 411,000 barrels per day for July.
West Texas Intermediate (WTI) Oil price is trading around $61.50 per barrel during the Asian hours on Monday, extending its gains for the second successive day. Crude Oil prices gain ground amid easing concerns over a trade war between the United States (US) and the European Union (EU).
Bloomberg reported that US President Donald Trump agreed to extend the 50% tariff deadline on the European Union (EU) from June 1 to July 9 after having a phone call with European Commission President Ursula von der Leyen on Sunday. Von der Leyen also posted on social media that the EU was ready to engage in trade talks with the United States (US) but requires more time to reach a deal.
On Friday, President Trump said in a post on Truth Social to impose 50% tariffs on imports from the European Union after Brussels sent a not-so-good trade proposal to Washington. This has dampened global economic growth and weakened energy demand.
Oil prices also receive support from rising geopolitical tensions as Israel’s military plans to capture 75% of the Gaza Strip within the next two months. This could raise concerns about a broader regional conflict in the Middle East. Additionally, concerns over more Oil supply from Iranian oil to global markets decrease due to limited progress in US-Iran nuclear talks.
However, the upside of the Oil prices could be limited as the OPEC+, the Organization of the Petroleum Exporting Countries and their allies, could decide to raise output by an additional 411,000 barrels per day (bpd) for July at next week’s meeting. The group may also unwind the remaining 2.2 million bpd voluntary production cut by the end of October, per Reuters.
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.