WTI declines below $58.00 on demand fears, Saudi Arabia's plans
- WTI price edges lower to $57.80 in Thursday’s Asian session.
- Saudi Arabia is taking strategic steps to maintain its economic stronghold by increasing oil production.
- Crude oil stockpiles in the US fell by 2.696 million barrels last week, according to the EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $57.80 during the Asian trading hours on Thursday. The WTI price remains on the defensive after posting its worst monthly drop since November 2021 amid the concerns over a global economic downturn and the signal from Saudi Arabia to sustain low oil prices.
WTI price extends the decline after Reuters reported that Saudi Arabia is willing to accept lower prices rather than consider additional production cuts. “History shows that when OPEC+ leadership decides to encourage compliance by supply pressure, it does not stop until it achieves its goal,” said Bob McNally, president and founder of Rapidan Energy Advisers LLC.
The weaker-than-expected US Gross Domestic Product (GDP) data contributes to the WTI’s downside. The Bureau of Economic Analysis revealed on Wednesday that the US economy contracted at an annualised rate of 0.3% in the first quarter (Q1) of 2025. This report suggests that tariffs may be weighing on economic growth.
The unexpected decline in crude inventories indicates a greater oil demand, which might support the WTI price. The Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending April 25 fell by 2.696 million barrels, compared to an increase of 244,000 barrels in the previous week. The market consensus estimated that stocks would drop by 600,000 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.