- WTI falls more than 1% as the prolonged commercial conflict between the US and China continues to weigh on energy demand.
- The IAE has adjusted its global oil demand prognosis by 2025, projecting the slower growth rate in five years.
- The growing commercial uncertainty has led several banks, including UBS, BNP Paribas and HSBC, to reduce their crude oil pricing forecasts.
The price of oil West Texas Intermediate (WTI) continues its decline per third consecutive session, losing more than 1.00% and negotiating about $ 60.30 per barrel during the first European hours on Wednesday. The fall in crude oil prices reflects the growing uncertainty caused by changes in US tariff policies, while operators evaluate the economic ramifications of the current commercial conflict between the US and China and its possible impact on energy demand.
On Tuesday, the International Energy Agency (AIE) reviewed its global oil demand prognosis by 2025, predicting the slower growth rate in five years. The IEA also pointed out that the growth of production in the US is expected to slow down due to tariffs introduced by US President Donald Trump and retaliation actions of commercial partners. In addition, the agency warned that the excess global oil supply could persist until 2026.
The combination of increasing tariffs and an increase in the production of OPEC+ – a coalition of the organization of oil export countries and its allies – has already led to oil prices falling approximately 13% this month. The uncertainty related to trade has led several banks, including UBS, BNP Paribas and HSBC, to downward their crude oil prices projections.
Further complicating perspectives, OPEC+ continues to increase production levels, while progress in nuclear discussions between the US and Iran could lead to an increase in Iranian oil exports. Meanwhile, President Trump’s investigation into critical mineral tariffs could tighten relations with key suppliers such as China, exacerbating concerns about economic growth and their effects on oil demand.
Meanwhile, the American Petroleum Institute (API) reported an unexpected increase of 2.4 million barrels in US oil inventories last week, in contrast to the anticipated decrease of 1.68 million barrels and the fall of 1,057 million barrels of the previous week.
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.
