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WTI trades near $72.00, moves little as market downplays US-China trade tensions

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WTI trades near $72.00, moves little as market downplays US-China trade tensions

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New update 2025.02.05 12:47
WTI trades near $72.00, moves little as market downplays US-China trade tensions

update 2025.02.05 12:47

  • WTI moves little as the market shrugs off concerns over US-China trade war while support from Iran-related supply concerns remains.
  • Trump reinstated his "maximum pressure" campaign, aiming to cut Iran's Oil exports to zero.
  • US API Weekly Crude Oil Stock rose by 5.025 million barrels in the previous week, against a previous 2.86-million-barrel build.

West Texas Intermediate (WTI) crude oil price remains in negative territory for the third consecutive session, trading around $72.20 per barrel during Asian hours on Wednesday. Crude Oil prices may decline further amid growing concerns over the US-China trade war. China's Commerce Ministry announced a 15% tariff on US coal and liquefied natural gas (LNG) imports, along with an additional 10% tariff on crude oil, farm equipment, and certain automobiles.

Crude Oil prices fluctuated widely on Tuesday, with WTI dropping by as much as 3%--its lowest since December 31--after China retaliated against the new 10% US tariff. However, Oil prices rebounded as supply risks appear linked to US President Donald Trump's intensified economic pressure on Iran.

On Tuesday, Trump reinstated his "maximum pressure" campaign to curb Iran's nuclear program by aiming to cut the country's Oil exports to zero and limit its regional influence. The move could impact around 1.5 million barrels per day of Iranian Oil exports.

The American Petroleum Institute (API) reported a significant rise in US crude Oil inventories, with stocks increasing by 5.025 million barrels for the week ending January 31, following a 2.86 million barrel builds the previous week. This marked the third straight week of inventory growth, exceeding expectations of a 3.17 million barrel build.

On Monday, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) reaffirmed plans to gradually increase oil production from April and removed the US Energy Information Administration (EIA) from its list of monitoring sources.

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.

 

Date

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 : 2025.02.05

Update

Last updated

 : 2025.02.05

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