- The price of WTI crude oil is falling due to uncertainty surrounding the impact of President Trump’s proposed tariffs and energy policies.
- API weekly crude oil inventories rose by 1 million barrels in the previous week.
- Trump threatened to impose “high levels” of sanctions and tariffs on Russian imports.
The price of West Texas Intermediate (WTI) crude oil continues its losing streak for the sixth straight session, trading around $74.90 during the early European hours on Thursday. Crude oil prices are falling amid uncertainty surrounding how tariffs and energy policies proposed by US President Donald Trump will affect global economic growth and energy demand.
Traders are assessing the potential impact of Trump’s proposed 10% tariff on imports from China, the world’s largest oil importer and a major manufacturing hub. While the 10% tariff is much lower than the previously threatened 60%, it has somewhat eased market concerns. However, Trump’s additional threats to impose tariffs on the European Union, as well as 25% tariffs on Canada and Mexico, continue to create uncertainty in the market.
The American Petroleum Institute (API) report pointed to a renewed increase in US crude oil inventories. According to the American Petroleum Institute’s (API) weekly crude oil inventory report, crude oil inventories rose by 1 million barrels during the week ending January 16, the first increase after five straight weeks of declines.
Crude oil markets may also face potential supply disruptions as President Donald Trump on Wednesday threatened to impose “high levels” of sanctions on Russia and tariffs on Russian imports. Trump called for a solution to the war in Ukraine, according to CNBC.
He added: “If we don’t make a deal, and soon, I have no other choice but to impose high levels of taxes, tariffs and sanctions on anything Russia sells to the United States and various other participating countries.” “, he wrote on Social Truth.
In related news, Saudi Arabia’s crude oil exports reached an eight-month high in November, rising 4.7% to 6.2 million barrels per day, compared to 5.9 million barrels per day in October. However, crude oil production saw a slight decline, falling to 8.9 million barrels per day from 9 million barrels per day.
Meanwhile, several ports in Texas began reopening on Wednesday after disruptions caused by Winter Storm Enzo earlier this week, which greatly impacted shipping and energy operations in the region.
Frequently asked questions about West Texas Intermediate crude oil
West Texas Intermediate oil is a type of crude oil that is sold in international markets. WTI stands for WTI, and is one of three main types including Brent and Dubai crude. WTI is also referred to as “light” and “sweet” due to its relatively low gravity and sulfur content, respectively. It is considered a high quality oil and easy to refine. It is sourced from the United States and distributed through the Cushing Hub, considered the “pipeline crossroads of the world.” It is a benchmark for the oil market and the price of WTI is frequently quoted in the media.
Like all assets, supply and demand are the main drivers of the price of WTI. 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 affect prices. Decisions by OPEC, a group of major oil-producing countries, are another major driver of the price. The value of the US dollar affects the price of WTI, as oil is mostly traded in US dollars, so a weak US dollar can make oil more affordable and vice versa.
Weekly oil inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI. Changes in inventories reflect fluctuations in supply and demand. If data shows a decline in inventories, this could indicate increased demand, leading to higher oil prices. High inventories can reflect increased supply, causing prices to fall. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar, falling within 1% of each other 75% of the time. EIA data is more reliable, because it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 oil-producing countries that collectively decides production quotas for member countries at meetings held twice a year. Their decisions often affect WTI prices. When OPEC decides to cut its quotas, it can tighten supply, causing oil prices to rise. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten additional non-OPEC members, most notably Russia.