Lagos — “The price of West Texas Intermediate (WTI) crude recorded its fourth consecutive declining session, closing around $66.30 per barrel, with a drop of more than 2.80%. During the session, the price hit a low of around $65.20, a level not seen since May 2023. This bearish movement has been driven by fundamental factors in the oil market, raising concerns among investors.
One of the main catalysts for the decline has been the unexpected increase in crude oil inventories in the United States. According to the latest data, inventories rose by 3.6 million barrels, reaching 433.8 million, which exceeded market expectations and projected an increase of only 341,000 barrels. This rise in inventories suggests lower demand or an oversupply, putting downward pressure on prices.
Additionally, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) announced an increase in crude production by 138,000 barrels per day starting in April. This decision reinforces the perception that the market could face an imbalance between supply and demand, increasing pressure on WTI prices in the short term.
Another factor influencing the price decline is global economic uncertainty. The recent announcements from the United States regarding the imposition of new tariffs on products from Canada, China, and Mexico have raised concerns about the impact on international trade and economic growth. Slower global growth tends to reduce oil demand, contributing to the price drop.
Analysts also closely monitor the Federal Reserve’s monetary policy, as high interest rates can slow economic activity and affect energy consumption. While some investors had anticipated signals of rate cuts, recent statements from the Fed have shown a cautious stance, adding further uncertainty to the economic outlook.
In the futures market, traders have adjusted their positions amid crude oil volatility, intensifying the price decline. The liquidation of long contracts and the increase in short positions have accelerated WTI’s bearish trend in recent days.
In conclusion, the decline in WTI is due to a combination of factors, including the increase in U.S. crude inventories, higher production by OPEC+, trade tensions, and the Federal Reserve’s monetary policy. As these elements continue to impact the market, investors will closely watch for new signals that could define the direction of oil prices in the coming weeks.”
*Analysis by Antonio Di Giacomo, Financial Markets Analyst for LATAM at XS
