- The price of WTI gains ground due to a decrease in crude oil inventories in the US
- Oil prices can lose ground due to persistent uncertainty around commercial conversations between the US and China.
- The president of the Fed, Powell, said a more cautious position on the decisions of interest rates, citing the continuous uncertainty in politics.
The price of crude oil West Texas Intermediate (WTI) recovers some land during Thursday’s Asian session, quoting around $ 58.10 per barrel after recent losses. The rebound is supported by a decrease in crude oil inventories in the US according to the latest EIA oil status report, crude oil reserves in the US fell to 2,032 million barrels in the week that ended on May 2.
However, oil prices remain under pressure due to persistent uncertainty around commercial conversations between the US and China. Like the two largest oil consumers in the world, tensions between them continue to weigh on the feeling of the market. The secretary of the US Treasury, Scott Besent, is scheduled to meet with China’s main economic official on May 10 in Switzerland in an attempt to revive stagnant negotiations.
The president of the United States, Donald Trump, on the other hand, said that China started the conversations and reiterated his refusal to reduce tariffs to take Beijing to the table. Besent moderated expectations, describing the meeting as a first step instead of an advanced negotiation phase.
Despite the mutual disposition to participate, recognized by the Chinese Ministry of Commerce, investors remain cautious. The commercial conflict threatens to reduce the global demand for oil, with the Brent crude rising slightly by optimism about possible progress, extending the rebound of relief on Wednesday. Even so, ING, EWA Manthey and Warren Patterson analysts emphasized that significant progress in tariff reduction is essential to improve oil demand perspectives.
To aggravate the feeling, the president of the Federal Reserve, Jerome Powell, warned that prolonged tariff policies could hinder the inflation and employment objectives of the Fed. He pointed out a more cautious position on the decisions of interest rates, citing the continuous uncertainty in politics. Although commercial tensions under the administration of Trump have previously undermined business and consumer confidence, the Fed does not see an urgent need for changes in rates in the absence of a more pronounced economic weakness.
WTI FAQS oil
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.
