- WTI price struggles amid expectations of a potential end to the Ukraine-Russia war ahead of the Trump-Putin meeting.
- Oil prices rose after Trump warned that failure to reach an agreement with Putin could lead to “very severe consequences.”
- Robust Japanese GDP growth and solid Chinese industrial production point to stronger Oil demand.
West Texas Intermediate (WTI) Oil price loses ground after registering more than 1.5% gains in the previous session, trading around $62.90 per barrel during the Asian hours on Friday. Crude Oil prices struggle amid expectations of a potential end to the Ukraine-Russia war ahead of the meeting between US President Donald Trump and Russian President Vladimir Putin in Alaska later in the day.
Both leaders will meet for the first time in six years, as Trump seeks to fulfill a key campaign promise to end Russia’s war in Ukraine by leveraging his rapport with Putin. However, he estimated only a “25% chance” of success. Ukraine’s President Volodymyr Zelensky, excluded from the talks, has warned that any decisions made without his involvement will be meaningless, per BBC.
Oil prices gained ground after President Trump warned that failing to reach an agreement with Putin could result in “very severe consequences.” He had earlier set a deadline for Russia to end the war, threatening tougher sanctions if unmet, including secondary tariffs on major oil purchasers such as China and India.
Additionally, prices of crude Oil appreciated on improved market sentiment amid rising odds of interest rate cuts by the US Federal Reserve (Fed). CME’s FedWatch tool indicates that Fed funds futures traders are now pricing in nearly a 92% chance of a 25 basis point (bps) interest rate cut at the September meeting. Lower rates reduce consumer borrowing costs and can boost economic growth in the United States, the world’s largest Oil consumer, which could support demand for crude.
Meanwhile, recent data released Friday showed Japan’s Gross Domestic Product (GDP) grew 0.3% QoQ in the second quarter, while China’s annual industrial production rose 5.7% in July, signaling stronger Oil demand from Asia’s key consumers.
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.
Source: https://www.fxstreet.com/news/wti-holds-losses-below-6300-ahead-of-trump-putin-peace-talks-202508150516