WTI tumbles to below $63.00 as tariff concerns mount

POPULAR ARTICLES

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $62.90 during the early European trading hours on Friday. The WTI trades in negative territory for the seventh consecutive day and heads for the biggest weekly loss since June.

WTI price remains under selling pressure near $62.90 in Friday’s early European session, down 0.45% on the day.
Concerns over the impact of US tariffs on the global economy continue to undermine the WTI price.
A bigger-than-expected draw in US crude inventories last week might cap the downside for WTI.

US President Donald Trump escalated tensions by targeting India with 50% tariffs and imposing 39% duties on Swiss exports to the US, while saying he’s “getting very close to a deal” with China. Higher US tariffs against many trade partners took effect on Thursday, fueling concerns over weaker global economic activity and sparking bearish sentiment among oil traders, which weighs on the WTI price.

Additionally, a potential meeting between Trump and Russian President Vladimir Putin contributes to the WTI’s downside, as it could impact tariffs related to Russian crude. Kremlin aide Yuri Ushakov said on Thursday that Trump and Putin would meet in the coming days in what would be the first summit between leaders of the two countries since 2021.

Nonetheless, oil prices find support from a larger-than-expected drop in US crude inventories. According to the Energy Information Administration, crude oil stockpiles in the US for the week ending August 1 fell by 3.029 million barrels, compared to a rise of 7.698 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.1 million barrels.

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.