West Texas Intermediate (WTI) Crude Oil fell to $60.70 due to worries about oversupply. This follows the restart of production at Kazakhstan’s Tengiz oil field after previous shutdowns. Additionally, geopolitical tensions are rising because of a US aircraft carrier near Iran, raising fears of possible conflict.

US-Canada Trade Tensions

US-Canada trade tensions are adding more uncertainty to the oil market. Possible tariffs could affect supply since Canada is the largest foreign supplier of crude oil to the US. Traders are closely watching the upcoming OPEC+ meeting, where major producers will evaluate demand and supply for 2026. WTI Oil, known for its high quality and low sulfur content, is affected by supply and demand, political stability, the value of the US Dollar, and OPEC’s production decisions. Weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) also play a significant role in its pricing, highlighting market trends. OPEC, which includes oil-producing nations, influences WTI prices by setting production limits. The addition of Russia and other non-OPEC countries in OPEC+ further impacts market behavior and pricing. Currently, West Texas Intermediate oil is retreating from recent highs as oversupply concerns resurface. News about Kazakhstan’s Tengiz field resuming production is pressuring prices. This indicates that the previous rise above $61 was not robust and was more related to temporary disruptions than to a major shift.

Energy Information Administration Data

The market seems to be stabilizing in a range, around $58 to $63 over the past month. Last week’s data from the Energy Information Administration (EIA) supports this cautious outlook, showing an unexpected increase in U.S. crude inventories of 2.1 million barrels when a slight decline was anticipated. This indicates there is plenty of supply in the market right now. For derivative traders, this situation favors strategies that capitalize on stable prices and time decay. We suggest selling out-of-the-money options, potentially through an iron condor strategy with strike prices set outside the current $58-$63 range. This approach can be profitable if WTI stays steady leading up to the next major event. However, we must consider the geopolitical risks that are providing some support for prices. Tensions with Iran and renewed US-Canada trade disputes prevent us from becoming overly pessimistic. The CBOE Crude Oil Volatility Index (OVX), a key measure of expected price fluctuations, has decreased to 34, but it remains higher than the lower levels we saw for most of 2025, showing that the market remains cautious about sudden changes. Everyone is now focused on the OPEC+ meeting scheduled for February 1st. The general expectation is that the group will keep its current production pause, but we are being careful. In 2025, a surprising announcement from their July meeting caused a 7% price jump in just one day, highlighting the risks of holding positions through this event. Create your live VT Markets account and start trading now.

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