WTI trades below $64.00, upside appears due to easing US-China trade tensions
- WTI price may regain ground as Oil demand unmounts tariff-related pressure amid easing US-China trade-war tensions.
- The stronger US jobs data eased concerns about an economic slowdown, supporting the Oil demand.
- Citigroup expects that the Fed will implement 25 basis point rate cuts in September, October, and December.
West Texas Intermediate (WTI) Oil price halts its two-day winning streak, trading around $63.90 per barrel during the European hours on Monday. However, the crude prices gained ground as global Oil demand recovered from tariff-related pressure amid easing trade-war tensions between the United States (US) and China.
US President Donald Trump said that he had a one and a half hours phone call with Chinese President Xi Jinping on Thursday, which resulted in a very positive conclusion for both countries. From the Trump administration, Secretary of the Treasury Scott Bessent, Secretary of Commerce Howard Lutnick, and Trade Representative Jamieson Greer, are scheduled to meet with their Chinese counterparts in London on Monday.
On Friday, US Nonfarm Payrolls (NFP) posted 139,000 new jobs added new jobs in non-agricultural businesses in May, higher than the market consensus of 130,000. Moreover, the Unemployment Rate remained steady at 4.2% and the Average Hourly Earnings remained unchanged at 3.9%, both readings came in stronger than the market expectation.
The stronger-than-expected United States (US) labor market data for May indicated underlying resilience in the job market. These figures eased concerns about an economic slowdown and supported the Oil demand.
Additionally, Citigroup, on Monday, predicted the Federal Reserve (Fed) to deliver a 25 basis point rate cut each in September, October, and December. The firm also expects the central bank to cut quarter basis point each in January and March 2026. This dovish outlook on the Fed could provide support for the Oil prices, as lower interest rates may improve economic activities in the US, the world’s largest Oil consumer.
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.