- The WTI price falls as commercial tensions between the US and China continue to affect demand perspectives.
- The US announced a strong increase in tariffs on Chinese imports, raising the total rate to 145%.
- Opec+ plans to increase production by 411,000 BPD in May, intensifying the fears of a possible excess supply.
The price of crude oil West Texas Intermediate (WTI) fell per second consecutive session, quoting around $ 59.30 per barrel during the Asian hours of Friday. The fall occurs in the middle of the increase in commercial tensions between the US and China, which are cloudying demand perspectives.
On Thursday, the US announced that tariffs on Chinese imports had increased to 145%, with a new 125%tax added on an existing 20%tariff. This movement eclipsed the 90 -day break of US President Donald Trump in the increase in tariffs for most other countries and increased concerns about China’s fuel demand, the world’s largest oil importer.
A prolonged commercial conflict between the US and China threatens to affect global trade, interrupt supply chains and decelerate economic growth, developments that would also reduce oil consumption in both nations, which are the main energy consumers in the world.
The US Energy Information Administration (EIA) cut its forecasts for global economic growth and oil demand, warning that tariffs could significantly impact oil prices. The agency now expects the global oil demand to grow only in 900,000 barrels per day (BPD) this year, below its previous forecast of 1.2 million BPD, reaching approximately 103.6 million BPD. By 2026, demand growth is now estimated at 1 million BPD, also below the above expectations.
EIA also reviewed its oil prices perspective for this year and next, citing greater uncertainty due to the weakest global growth and a possible increase in supply. In addition, the Opec+Alliance, which includes Russia, plans to increase production by 411,000 BPD in May, feeding concerns about excess market.
Meanwhile, the Trump administration imposed new sanctions on Iranian oil networks, including a storage installation in China, only days before planned conversations between the US and Iran. At the same time, the Keystone pipeline remains closed after a spill in North Dakota, without a schedule for its reopening, which raises additional supply risks.
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.
