WTI recovers above $71.00 as tariff fears ease
- WTI drifts higher to $71.30 in Friday’s early Asian session.
- Trump launches plan to target countries with new tariffs
- A potential Russia-Ukraine peace deal might cap the WTI’s upside.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $71.30 during the early Asian session on Friday. The WTI price trades with mild gains as US tariff announcements by US President Donald Trump were delayed until at least April.
Trump on Thursday ordered his administration to consider imposing reciprocal tariffs on numerous trading partners. However, commerce and economics officials need to study reciprocal tariffs against countries that place tariffs on US goods and it will not be due until April 1. The hope is that the world could avoid a trade war and lift the WTI price.
"We saw a big recovery in prices on tariffs not going into effect until April," said Phil Flynn, senior analyst with Price Futures Group. "That will allow time for negotiation.”
The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the United States for the week ending February 7 climbed by 4.07 million barrels, compared to a rise of 8.664 million barrels in the previous week. The market consensus estimated that stocks would increase by 2.8 million barrels.
Hopes of eased Russian sanctions following optimism over a potential Ukraine-Russia peace deal might cap the upside for the black gold. On Wednesday, Trump said Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed a desire for peace in separate phone calls with him. Trump ordered U.S. officials to begin talks on ending the war in Ukraine.
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.