WTI rises to near $63.50 due to covering short positions
- WTI price edges higher as investors capitalized on Monday’s sharp sell-off to cover short positions.
- President Trump warned that the US economy could slow unless interest rates are cut immediately.
- Growing uncertainty surrounding US monetary policy fuels concerns over crude Oil demand.
West Texas Intermediate (WTI) Oil price retraces its recent losses from the previous session, trading around $63.30 per barrel during the European hours on Tuesday. The uptick in crude Oil prices came as investors took advantage of Monday’s sharp sell-off to cover short positions.
According to Reuters, Hiroyuki Kikukawa, Chief Strategist at Nissan Securities Investment, commented, “Some short-covering emerged after Monday’s sharp sell-off.” Hiroyuki also noted that lingering concerns over a potential recession, driven by ongoing trade tensions, are likely to keep the WTI price within the $55–$65 range for now.
On Monday, US President Donald Trump reiterated his criticism of Federal Reserve Chair Jerome Powell, warning that the US economy could slow unless interest rates are cut immediately. His remarks stoked concerns about the Fed’s independence and added to uncertainty surrounding US monetary policy.
“The increasing unpredictability of US monetary policy is expected to weigh on financial markets and the broader economy, raising fears of declining crude oil demand,” analysts noted. A Reuters poll conducted on April 17 indicated that investors now see a nearly 50% chance of a US recession within the next 12 months, driven largely by the impact of current tariff policies.
Meanwhile, developments in US-Iran relations could further pressure oil prices. Over the weekend, both nations agreed to begin drafting a framework for a potential nuclear deal. Any breakthrough could ease supply concerns, as Iran remains a key Oil producer.
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.