WTI trades around $76.00, experiences volatility in the wake of executive orders by Trump
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Akhtar Faruqui
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WTI trades around $76.00, experiences volatility in the wake of executive orders by Trump

  • WTI Oil price experiences significant volatility as traders evaluate a series of executive orders issued by President Trump.
  • Trump plans to impose 25% tariffs on Canadian imports, raising higher cost risks for the majority of Canada’s Oil exports.
  • US President Donald Trump repealed actions taken by former President Joe Biden to restrict Oil drilling.

West Texas Intermediate (WTI) Oil price ended a three-day losing streak, holding steady near $76.20 during European trading hours on Tuesday. Crude Oil markets experienced significant volatility as traders assessed a series of executive orders issued by US President Donald Trump shortly after his inauguration.

One of the key measures included a plan to impose 25% tariffs on imports from Canada and Mexico starting February 1, disappointing investors who had hoped for a delay in implementation. Crude Oil prices gained momentum as the proposed duties on Canadian crude imports were seen as a potential driver for higher market prices.

Canada exports nearly all of its crude Oil to the United States (US), often at a discount to WTI. "US sanctions therefore raise the risk of higher costs for most of Canada's Oil exports," Commonwealth Bank analyst Vivek Dhar noted in a report, according to Reuters.

Former President Donald Trump refrained from announcing specific tariffs on China, the world's largest Oil importer, leaving markets uncertain. Traders are keeping a close eye on developments in tariff policies, as Trump previously threatened China with tariffs of up to 60% in December.

At the same time, concerns about a potential surge in US oil production loomed large, fueled by Trump’s “drill, baby, drill” agenda. On Monday, Trump unveiled an ambitious plan to expedite the permitting process for Oil, gas, and power projects, aiming to boost already record-high US energy production.

One of Trump’s executive orders on his first day in office repealed actions taken by former President Joe Biden to restrict Oil drilling. Trump reversed Biden’s ban on Oil drilling in the Arctic and along extensive areas of the US coastline.

According to the White House, Trump also nullified a 2023 memo that had prohibited Oil drilling across 16 million acres (6.5 million hectares) in the Arctic. These moves signaled a sharp policy shift and highlighted the administration's commitment to maximizing domestic energy output.

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.