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WTI extends the rally above $63.00 on easing trade tensions

  • WTI price gains momentum to around $63.25 in Wednesday’s early Asian session. 
  • The US and China slash tariff rates by 115%, supporting the WTI price. 
  • Crude oil stockpiles in the US rose by 4.287 million barrels last week, according to the API. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.25 during the Asian trading hours on Wednesday. The WTI price extends its upside amid easing trade tensions between the United States (US) and China, which prompt traders to dial back odds of a recession. 

The US and China agreed over the weekend in Switzerland to slash tariff rates by 115%. US President Donald Trump agreed to cut extra tariffs imposed on Chinese imports in April this year to 30% from 145%, and Chinese duties on US imports will be reduced to 10% from 125%. The lower tariff rate is effective for 90 days. A temporary cut in US-China tariffs, the world’s two largest petroleum consumers, could boost the WTI price in the near term. 

The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the US for the week ending May 9 climbed by 4.287 million barrels, compared to a fall of 4.49 million barrels in the previous week. The market consensus estimated that stocks would drop by 2.4 million barrels.  

The Organization of the Petroleum Exporting Countries and its allies (OPEC+) are set to boost oil exports in May and June, which might cap the upside for the black gold. OPEC has raised oil output by more than previously expected since April, with its May output likely to increase by 411,000 barrels per day.

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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Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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