- The WTI price can face challenges in the midst of growing concerns about global demand after Trump’s tariffs.
- Trump’s new letters detail individual tariff rates that range between 20% and 50% in eight countries, which will enter into force as of August 1.
- The change in EIA crude oil stocks reported an increase of 7.07 million barrels for the previous week, compared to the expectations of a decrease of 2.0 million barrels.
The price of oil West Texas Intermediate (WTI) extends its winning streak for the fourth consecutive day, negotiating around $ 67,40 per barrel during the first European hours on Thursday. However, crude oil prices can face challenges amid growing concerns about global demand, driven by the potential impact of the tariffs of US President Donald Trump in global economic growth.
President Trump presented on Wednesday a new round of tariff demand letters, which include a 50% rate on Brazil, a 30% rate on Algeria, Libya, Iraq and Sri Lanka, and a 20% rate on the Philippine products, which will enter into force in August, according to Bloomberg.
In addition, the Energy Information Administration (EIA) reported an increase of 7.07 million barrels in crude oil stocks for the week ended on July 4, compared to market expectations of a decrease of 2.0 million barrels. This follows a previous increase of 3,845 million barrels. However, the stocks of distillates and gasoline decreased, the latter being an indicative of a strong demand.
Meanwhile, the organization of oil exporting countries and its allies, known as OPEP+, is preparing for another significant increase in production in September, since eight members gradually eliminate volunteer cuts and the United Arab Emirates (EAU) change to a higher production quota. Despite the expected increase in the offer, the EAU emphasized that stocks are not accumulating, indicating that the demand remains robust.
The latest minutes of the Federal Open Market Committee (FOMC) of the June 17-18 meeting, published on Wednesday, indicated that only a few federal reserve officials (FED) considered that a reduction in the federal funds rate would be appropriate at some time this year. The highest interest rates make indebtedness more expensive in the United States, the world’s largest oil consumer, which reduces the demand for crude oil.
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.
