Weekly Inventory Reports

Weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) play a crucial role in influencing WTI prices by showing changes in supply and demand. When inventories drop, prices usually rise. Conversely, higher inventories can result in lower prices. API releases its data on Tuesdays, while EIA follows on Wednesdays, and their findings generally align with each other. The Organisation of the Petroleum Exporting Countries (OPEC) also impacts WTI prices by setting production levels. Lowering production quotas can push prices up by tightening supply, while increasing production can lead to lower prices. OPEC+ includes additional countries outside OPEC, which further affects market conditions. Currently, WTI is opening at $56.79, indicating ongoing pressure on crude prices, reflecting a broader economic slowdown. This price is much lower than the averages from 2023 and 2024, showing a significant change in market dynamics. In the coming weeks, we can expect ongoing worries about global demand. Recent data supports this cautious view. China’s GDP growth for the third quarter of 2025 was only 4.2%, which was below expectations. In Europe, the September manufacturing PMI showed a reading of 48.5, indicating a continued decline in industrial activity. These numbers suggest a long-term drop in energy consumption.

Supply and Market Dynamics

On the supply side, OPEC+’s recent decisions haven’t sufficiently supported prices. In their last meeting in Vienna in September 2025, the group kept production quotas unchanged. However, reports indicate that compliance from key members like Russia is weakening. This oversupply is arriving when it is least needed in the market. EIA’s inventory reports confirm this oversupply. This week’s report showed an unexpected increase of 2.1 million barrels, against analyst expectations for a small decrease. This marks the third inventory build in four weeks, indicating that supply is consistently exceeding demand in the U.S. Additionally, the strong U.S. Dollar is a challenge for oil prices. The Federal Reserve indicated last month that interest rates would likely stay high into 2026 to address ongoing services inflation, and the Dollar Index has remained around 107. A strong dollar makes crude oil more expensive for buyers using other currencies. For those trading derivatives, this market situation suggests that selling during price increases may be the best strategy. We expect WTI to test the $55 support level soon. Options strategies like buying puts or creating bear call spreads could be useful for preparing for further declines or stable trading. Create your live VT Markets account and start trading now.

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