- WTI remains on the defensive around $66.45 in Monday’s early European session.
- Trump’s tariff threats continue to undermine the WTI price.
- Softer Chinese CPI inflation contributes to the WTI’s downside.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $66.45 during the early European session on Monday. The WTI price remains under selling pressure amid concern about the impact of US import tariffs on global economic growth and the risk-off mood.
US President Donald Trump issued an executive order last week exempting goods from both Canada and Mexico under a North American trade agreement, known as USMCA, while raising taxes on Chinese goods. China retaliated against the US and Canada with tariffs on agricultural products, per Reuters. The tariffs were announced by the Commerce Ministry and scheduled to take effect on March 20. Tariff uncertainty under the Trump administration continues to undermine the WTI price in the near term.
Concerns about US growth also weigh on the WTI price. The US February Nonfarm Payrolls (NFP) data came in weaker than expected, suggesting that the Federal Reserve (Fed) remained on track to cut interest rates multiple times this year. Traders pushed their bets on a start to Fed rate cuts to June, from May before the report, but still expect a total of three cuts in 2025.
Weak economic data from China contributes to the WTI’s downside as China is the top consumer of oil in the world. Data released by the National Bureau of Statistics (NBS) on Sunday showed that China’s CPI in February missed expectations and fell at the sharpest pace since January 2024. The CPI fell 0.7% in February from a year earlier, reversing January’s 0.5% increase.
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.