WTI edges lower below $64.50 amid fears of weaker demand

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WTI price declines to near $64.35 in Tuesday’s early Asian session.
The heightened US tariffs on Indian goods raise concerns about weaker demand, which weighs on the WTI price.
The prospect of a Fed rate cut and rising tensions between Russia and Ukraine might help limit the WTI’s losses.

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $64.50 during the early Asian trading hours on Tuesday. The WTI edges lower amid concerns about weaker global demand following US President Donald Trump's doubling of the existing 25% duty on Indian exports. Traders brace for the American Petroleum Institute (API) weekly crude oil stock, which will be published later on Tuesday.

The Trump administration’s decision to impose steep tariffs on Indian imports took effect, raising fears of slowing trade and weaker global demand, which undermines the WTI price. The Trump administration doubled tariffs on Indian imports to 50%, citing India’s refusal to stop buying Russian crude and defence hardware.

Trump on Monday criticized the tariff and trade relationship between the US and India, saying it has been heavily one-sided for decades. His comments came after India's Prime Minister Narendra Modi strengthened relationships with China and Russia amid deteriorating relations with the US.

However, concerns that intensifying airstrikes in Russia and Ukraine could lead to supply disruptions might cap the downside for the WTI. Ukrainian President Volodymyr Zelenskiy on Sunday vowed to retaliate against Russian drone strikes on power facilities in his country's north and south and ordered more attacks deep inside Russia, per Reuters. US President Donald Trump threatened to impose additional sanctions on Russia if no progress is made in peace talks with Ukraine.

Additionally, rising bets of a Federal Reserve (Fed) rate cut this month might weigh on the US Dollar (USD) and underpin the USD-denominated commodity price. Traders are now pricing in nearly an 89% chance of a 25 basis points (bps) rate cut by the Fed at the September policy meeting, up from 85% odds before the US PCE data, according to the CME FedWatch tool.

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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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