- Crude prices trim gains and drift below $65.00 following a new round of US tariffs.
- Strong US data and easing hopes of immediate Fed cuts are also pressuring Oil prices.
- From a wider perspective, however, the price of the WTI crude remains about 3.6% higher on the week.
Crude prices are trimming previous gains on Friday, as a new tariff salvo from US President Donald Trump has brought fears of a decline in global demand. The price of the US benchmark WTI has retreated to the $64.75 area during the European morning session, from three-week highs, at $65.30 on Thursday.
Just when the market was already turning the page of tariffs, Trump stirred the pot, announcing 100% levies for imports of branded pharmaceuticals, 25% on heavy-duty trucks, and 50% on kitchen cabinets. It is still unclear how these tariffs will be implemented and on which countries, but the announcement has already revived fears of a decline in global trade and, consequently, a decrease in demand for oil.
Crude prices were also affected on Thursday by the solid US macroeconomic figures. Strong US data eases pressure on the Fed to lower interest rates further in the coming months, which would weigh on the growth of the world’s largest economy and limit its energy consumption.
The price of the US Benchmark WTI Oil, however, remains on track to its sharpest weekly gain in months, on the back of a 3.6ª% rally from lows near $61.50.
Data by the Energy Information Administration showed an unexpected drawdown on US crude commercial stockpiles, providing additional support to an already optimistic Oil trend as the reiterated Ukrainian attacks on some of the main Russian oilfields have been crippling the capacity of one of the world’s major crude producers over the last week.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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Editors’ Picks
GBP/USD consolidates weekly losses near 1.3350; US data eyed
GBP/USD consolidates weekly losses near 1.3350 in the European session on Friday, staying close to seven-week troughs. The pair draws support from a pause in the US Dollar upside as traders take a breather and reosition themselves before the key US PCE inflation data release.
Gold trades with positive bias as USD retreats from three week top ahead of US PCE data
Gold turns positive for the second straight day following an intraday dip to the $3,734 area and touches a fresh daily peak during the first half of the European session on Friday. The commodity, however, remains confined in the previous day’s broader trading range as traders opt to wait for the release of the US PCE Price Index before placing fresh directional bets.
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