The US benchmark West Texas Intermediate Oil has lost nearly $1 per barrel on Tuesday, retreating to levels near $58.00, right above the five-month lows of $57.90 hit last week, hammered by growing trade tensions between the US and China.
The world’s two major economies have opened a new front in their trade feud, announcing higher fees on cargo ships, which will take effect from today.
This news has taken markets by surprise, crushing hopes of a de-escalation of tensions. The US Treasury’s Scott Bessent had soothed traders on Monday, announcing that US President Trump will meet Xi Jinping in late October.
Trump himself had eased his tone towards China after threatening 100% tariffs on Friday. Beijing, however, has remained firm, accusing the US of “double standards” with China, while the commerce ministry warned that the US cannot seek dialogue while threatening new measures.
Meanwhile, Crude producers are planning to hike output by 137,000 additional barrels per day in November. This is a more moderate increase than expected, yet it keeps fears of an Oil glut alive as trade uncertainty remains high, and most of the world’s leading economies are stuttering.
(This story was corrected on October 14 at 07:45 GMT to say that Oil prices have lost more than $1 so far on Tuesday, and not on Monday, as previously reported).
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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