WTI US Oil is currently priced at about $58.30, up 0.30% after recovering from some losses. However, ongoing trade tensions between the US and China, along with the International Energy Agency’s (IEA) warning of a possible supply glut in 2026, keep the market cautious. The IEA estimates that global oil supply might exceed demand by 4 million barrels per day next year. This imbalance is driven by OPEC+ boosting output while consumption remains slow, which could lead to lower WTI prices.

US-China Trade Relations

US-China trade relations have deteriorated recently, as both nations have added port fees on cargo shipments. This could raise shipping costs and disrupt freight flows, causing worries about decreased global energy demand. Traders are looking forward to the American Petroleum Institute’s (API) weekly Crude Oil inventory report. An increase in inventories could raise fears of oversupply, while a decrease could temporarily raise oil prices. Geopolitical risks might offer some support for prices. US President Trump’s remarks about potential missile deliveries to Ukraine have raised concerns about new sanctions on Russian energy exports. WTI Oil is a key benchmark in the market, recognized for its low gravity and sulfur content. Factors like supply, demand, geopolitical events, and currency values significantly influence its price. Reports from the API and EIA provide important insights into inventory changes that can affect prices.

Geopolitical Risks

Years ago, we voiced concerns about a potential supply glut, and those fears now seem to be coming true as we near 2026. The latest report from the IEA confirms that global supply growth, mainly from record production in the US and Brazil, is surpassing sluggish demand. This suggests oil prices may decline. While the US-China trade wars have changed, concerns about demand from the world’s largest oil importer continue to be a major issue. China’s manufacturing PMI for September 2025 was 49.8, falling short of expectations and indicating a decline in factory activity. This disappointing data adds to fears of a slowing global economy and reduced energy consumption for this year. To help stabilize the market, OPEC+ announced it would continue its voluntary production cuts of 2.2 million barrels per day through the first quarter of 2026. However, the market reacted minimally, as reflected in the latest EIA data. The report for the week ending October 10th showed an unexpected U.S. crude inventory increase of 3.8 million barrels, revealing that the current supply cuts are not yet tightening the market. With oversupply and weakening demand, there are opportunities to implement bearish strategies on WTI futures. Buying put options or using bear put spreads can be a low-risk way to profit if prices slide toward the low $50s. These strategies are favorable since implied volatility remains moderate, making option premiums more affordable. It’s important to stay alert, as geopolitical risks could cause sudden price spikes. Renewed tensions in the Strait of Hormuz could trigger short-term increases in prices. Therefore, any bearish strategy should include careful risk management to guard against unexpected market reversals. Create your live VT Markets account and start trading now.

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