- WTI continues to be weighed down by worries that an all-out trade war will dent fuel demand.
- Oversupply concerns, amid the OPEC+ decision to advance output, also weigh on the black liquid.
- Rising Fed rate cut bets keep the USD depressed and offer some support to the commodity.
West Texas Intermediate (WTI) US Crude Oil prices trade with negative bias for the fourth straight day on Friday and slide back below the $66.00/barrel mark during the Asian session. The commodity languishes near its lowest level in over three weeks and remains on track to register heavy weekly losses.
US President Donald Trump’s sweeping reciprocal tariffs announced late Wednesday raised concerns about a widening trade war, which could slow economic growth and dent fuel demand. Adding to this, eight OPEC+ members unexpectedly advanced their plan to phase out production cuts and raise combined crude oil output by 411,000 barrels per day in May. This, in turn, sparks oversupply concerns and turns out to be a key factor weighing on the black liquid.
Meanwhile, the US Dollar (USD) languishes near the lowest level since October touched on Thursday amid bets that a tariff-driven US economic slowdown might force the Federal Reserve (Fed) to resume its rate-cutting cycle soon. This is seen offering some support to USD-denominated commodities and holding back traders from placing aggressive bearish bets around Crude Oil prices. Investors now look forward to the US employment details for a fresh impetus.
The popularly known US Nonfarm Payrolls (NFP) report is expected to show that the US economy added 135K new jobs in March, though the Unemployment Rate is anticipated to hold steady at 4.1%. The crucial data will play a key role in influencing the USD price dynamics later during the North American session and produce short-term trading opportunities around Crude Oil prices. The market focus, however, will remain glued to trade-related headlines.
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.