WTI drifts higher above $69.50 amid escalating trade war risks
- WTI price edges higher to $69.70 in Friday’s early Asian session.
- Trump threatened tariffs on buyers of Venezuelan oil.
- Crude oil stockpiles in the US fell by 3.341 million barrels last week, noted EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.70 during the early Asian session on Friday. The WTI price gains momentum to a one-month high as the US threat of tariffs on countries buying Venezuelan production still supports prices.
WTI price has edged higher since US President Donald Trump slapped a 25% secondary tariff on nations that buy Venezuelan oil or gas, effective April 2. The United States (US) bought $5.6 billion worth of oil and gas from Venezuela in 2024, making it one of the top foreign suppliers of oil to the US last year, according to Commerce Department trade data.
The decline in crude oil inventories provides some support to the crude oil prices. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending March 21 fell by 3.341 million barrels, compared to an increase of 1.745 million barrels in the previous week. The market consensus estimated that stocks would decrease by 1.6 million barrels.
However, the concerns that Trump auto tariffs will slow oil demand could drag the WTI price lower. On Wednesday, US President Donald Trump unveiled his plan to implement 25% tariffs on imported cars and light trucks effective on April 2, while those on auto parts begin on May 3. "The biggest headwind for oil right now are the concern about tariffs, and tariffs might slow demand," said Phil Flynn, senior analyst with Price Futures Group.
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.