WTI Oil prices have hit a five-month low at $56.52, with current trading around $56.70 per barrel. Concerns about global energy supplies are growing. President Trump and President Putin will meet in Hungary to discuss the war in Ukraine. A resolution could lift restrictions on Russian Oil, increasing global supply. At the same time, Ukrainian President Zelenskiy plans to meet Trump in Washington to ask for more military assistance.

Global Supply Concerns

India and China are under pressure from the US to stop importing Russian oil. However, Indian refiners are trying to reduce their imports and are waiting for guidance from New Delhi after Trump’s recent announcement about halting purchases. The Energy Information Administration (EIA) has reported that US crude inventories rose by 3.524 million barrels last week, much more than the expected increase of 0.12 million barrels. This rise is due to reduced refinery activity during maintenance season. US-China trade tensions remain an issue, with US officials criticizing China’s plans regarding rare earth exports. The US views these actions as “economic coercion” and a “power grab” in the global supply chain. WTI Oil is known for its high quality and plays a key role in international markets. Its price depends on several factors, including supply-demand dynamics, global growth, political events, and decisions made by OPEC. Inventory data from API and EIA also significantly influence price changes. With WTI crude oil dropping to a five-month low around $56.50, further declines are likely in the coming weeks. The main concern is the growing fear of oversupply, especially with a potential peace deal in Ukraine. This follows a period where prices were over $70 as recently as August 2025, making this drop notable.

Market Implications

The upcoming Trump-Putin meeting is crucial. Any positive outcome for Ukraine could ease restrictions on Russian oil exports. We saw something similar in 2015 with the Iran nuclear deal, which led to a lengthy decline in oil prices as the market anticipated increased supply. A favorable result from the Hungary meeting could bring millions of barrels of Russian crude to the market. Domestically, the supply situation looks bearish. The EIA reported a surprising increase in inventories of over 3.5 million barrels, marking the fourth consecutive week of inventory rises—a trend not seen since spring 2024. US crude production remains strong at nearly 13.2 million barrels per day through the third quarter of 2025. On the demand side, escalating trade tensions between the US and China could slow global growth. Recent data from the World Trade Organization forecasts a decline in global trade in the last quarter of 2025 due to these tensions. This will likely lead to lower energy consumption from both nations, putting additional pressure on oil prices. For derivative traders, this environment may be ideal for buying put options on WTI futures, which could profit from further price declines. Alternatively, selling call credit spreads might benefit traders if prices stay flat or continue to drop. Both strategies carry defined risk and take advantage of the current bearish mood. Those trading futures contracts should consider starting short positions, targeting support levels around $52-$54 from early 2025. Following the sharp price drop, the implied volatility in WTI options has increased, making selling premium a tempting approach. Watch for important technical levels to break before adding to short positions. Create your live VT Markets account and start trading now.

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