- The WTI price fights while the persistent commercial tensions increase concerns about global demand perspectives.
- The operators expect updates on trade negotiations between the US and the EU this week.
- The Sovereign Fund of Indonesia, Dancara, is about to sign a contract of 8,000 million dollars with the US engineering firm KBR Inc.
The price of oil West Texas Intermediate (WTI) extends its losses per third consecutive session, negotiating around $ 65.50 during the European hours on Tuesday. The price of black gold depreciates as the current commercial tensions increase fears on demand perspectives.
The operators adopt caution before the deadline of August 1 imposed by US President Donald Trump for tariffs. Market participants expect more updates on commercial negotiations between the main consumers of crude, United States (USA) and the European Union (EU), this week, waiting for a final commercial agreement to be completed before the deadline.
Trump threatened to impose 30% tariffs on EU exports. In response, the European bloc is exploring a broader set of possible countermeasures against the USA as the prospects for an acceptable commercial agreement with Washington faded, they cited diplomats from the EU to Reuters.
Reuters reported Tuesday that the Sovereign Fund of Indonesia, Dancara, plans to sign a contract of 8,000 million dollars with the US engineering firm KBR Inc. to build 17 modular refineries. The agreement resulted in a reduction in the US proposed tariff rate from 32% to 19%.
The price of oil faces challenges as the concerns about the supply are relieved, with the main producers increasing production. The joint organizations data initiative showed that crude oil exports from Saudi Arabia in May reached its highest level in three months.
In addition, supply pressures have decreased even more after the high fire on June 24 that ended the conflict between Israel and Iran. In addition, Iran announced Monday that it will restart nuclear negotiations with European nations this week, with the aim of reviving the 2015 nuclear agreement and prevent the reinstatement of international sanctions.
WTI oil – frequent questions
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
