WTI drops to near $57.70 as fears of weakening global demand intensify
- WTI remains under pressure amid growing concerns about weakening global demand.
- New US tariffs came into effect today—most notably a sharp 104% duty on imports from China.
- The OPEC+ alliance is set to boost production by 411,000 barrels per day in May.
West Texas Intermediate (WTI) Oil continues to decline for the second consecutive day, trading near $57.70 during early European hours on Wednesday. The drop in Oil prices is driven by mounting concerns over weakening global demand, exacerbated by escalating tensions in the ongoing US-China trade war.
New tariffs imposed by US President Donald Trump took effect today, including a steep 104% duty on imports from China—the world’s largest Oil consumer. While the White House has signaled a willingness to engage in trade negotiations, Beijing has responded firmly, vowing to "fight to the end," suggesting that the dispute could be drawn out.
According to Reuters, Ye Lin, Vice President of Oil Commodity Markets at Rystad Energy, commented: “China’s 50,000 to 100,000 barrels per day of Oil demand growth is at risk if the trade war persists. However, a robust domestic stimulus could help offset some of the losses.”
Despite the tension, President Trump has expressed openness to resolving trade issues through dialogue, raising hopes for a potential de-escalation. Supporting this sentiment, US Treasury Secretary Scott Bessent noted that nearly 70 countries have contacted the administration to discuss tariff measures.
Adding to the downward pressure on Oil, the OPEC+ alliance—which includes OPEC members and partners like Russia—plans to increase output by 411,000 barrels per day in May. The production boost raises concerns that the market could shift into surplus.
Meanwhile, data from the American Petroleum Institute (API) showed that US crude oil inventories fell by 1.057 million barrels last week, partially reversing the previous week’s build of 6.037 million barrels.
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.