WTI remains on the defensive below $58.50 on supply surplus fears, US-China trade tensions

POPULAR ARTICLES

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $58.25 during the early European trading hours on Wednesday.

WTI price recovers some lost ground near $58.25 in Wednesday’s early European session, but upside might be limited.
Supply glut fears and rising US-China trade tensions could weigh on the WTI price.
Traders await the release of the API weekly crude oil stock report later on Wednesday.

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $58.25 during the early European trading hours on Wednesday. The WTI remains on the defensive as trade tensions persist between the US and China and as the International Energy Agency (IEA) warns of a huge supply glut in 2026. Traders brace for the American Petroleum Institute (API) weekly crude oil stock report later on Wednesday.

Escalating trade tensions between the United States (US) and China, the world's two largest oil consumers, could curtail demand and weigh on the WTI price. Both countries will impose additional port fees on ships carrying cargo between them. This measure will likely raise trading costs and disrupt freight flows. The US is scheduled to start collecting fees on October 14.

"The focus will remain on the recent re-escalation in trade tensions between the US and China and the risks it brings to the global economy," said Tony Sycamore, a market analyst at IG.

The IEA said on Tuesday the global oil market could face a surplus of global oil supply growth next year of as much as 4 million barrels per day (bpd), a bigger glut than it earlier estimated, as the Organization of the Petroleum Exporting Countries and its allies (OPEC+) raise output and demand remains sluggish.

On the other hand, the downside for the black gold might be limited, as concerns over the ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies. US President Donald Trump said that he is considering sending long-range Tomahawk cruise missiles to Ukraine, per the BBC.

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.