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- WTI price gains momentum to around $63.25 in Wednesday’s early Asian session.
- The US and China slash tariff rates, providing support for the WTI price.
- Crude oil stockpiles in the US rose by 4.287 million barrels last week, according to the API.
West Texas Intermediate (WTI), the benchmark for US crude oil, is currently trading near $63.25 during Wednesday’s Asian trading session. The WTI price is experiencing upward momentum, fueled in part by the de-escalation of trade tensions between the United States and China. This easing of tensions has led market participants to reassess and reduce the probability of a global recession, which had previously weighed on oil prices.
Over the weekend in Switzerland, the US and China reached an agreement to significantly reduce tariff rates. Specifically, the agreement involves a substantial reduction in levies imposed by both nations. US President Donald Trump consented to decrease the additional tariffs levied on Chinese imports, initially implemented in April of this year, from 145% to 30%. Concurrently, China will lower its duties on US imports from 125% to 10%. This temporary tariff reduction is slated to remain in effect for a period of 90 days. This interim decrease in tariffs between the United States and China, the world’s two largest consumers of petroleum, has the potential to stimulate demand and consequently bolster the WTI price in the short term. Market analysts are closely watching the impact of these tariff adjustments on global trade flows and their subsequent effect on energy consumption.
The latest weekly report from the American Petroleum Institute (API) revealed that crude oil stockpiles in the US for the week ending May 9 experienced a notable increase of 4.287 million barrels. This contrasts with the previous week’s data, which showed a decrease of 4.49 million barrels. Furthermore, the reported increase significantly deviates from the market consensus, which had anticipated a drawdown in inventories of approximately 2.4 million barrels. This unexpected build in crude inventories has introduced some downward pressure on oil prices, as it suggests potentially weaker demand or increased production levels. Investors will be closely monitoring official inventory data from the Energy Information Administration (EIA) later today to confirm this trend and assess its implications for the oil market.
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