- The price of WTI faces challenges while operators adopt caution amid the growing uncertainty about US commercial policy.
- Trump’s chosen as Secretary of Commerce, Howard Lutnick, suggested that Canada and Mexico could avoid tariffs.
- Oil prices fought while EIA reported an increase of 3,463 million barrels in US reserves for the previous week.
The price of crude oil West Texas Intermediate (WTI) continues to decrease per second consecutive session, quoting around $ 72.20 per barrel during the first hours of the morning in Europe on Thursday. Investors remain cautious while uncertainty looms on the United States commercial policy (USA), after contradictory statements of the White House on the tariffs proposed by President Donald Trump to Canada and Mexico, two key oil suppliers for USA.
White House spokeswoman, Karoline Leavitt, confirmed Tuesday that Trump is still committed to the implementation of tariffs to Canada and Mexico as planned for Saturday. On Wednesday, Trump’s nominee for Secretary of Commerce, Howard Lutnick, suggested that Canada and Mexico could avoid tariffs if border controls over fontanil are quickly hardening and stop China’s advances in artificial intelligence. Lutnick advocates broad and general tariffs aimed at countries instead of specific products, reinforcing a more aggressive position towards China.
Crude oil prices also remain under pressure after the Energy Information Administration (EIA) reports an increase of 3,463 million barrels in US reserves for the week that ended on January 24. This marks the first accumulation of inventories after nine consecutive weeks of decreases, closely aligning with the expectations of analysts of an increase of 3.19 million barrels. The recent winter storms in the US have further decreased oil demand.
In the front of the offer, Russia crude oil exports are expected to decrease 8% in February compared to January, since Moscow increases refining operations. The fall occurs in the midst of new US sanctions, which have hardened the restrictions on Russian crude oil exports.
Meanwhile, oil prices could face additional winds due to the cautious approach to the Federal Reserve monetary policy (FED). As was widely anticipated, the FED maintained its reference interest rate at 4.25% -4.50% during its January meeting. High indebtedness costs typically weigh on economic activity, subsequently reducing oil demand.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
