West Texas Intermediate (WTI), the US crude oil benchmark, traded near $66.05 in early Asian trading on Wednesday. Prices slipped after a sharp jump in US crude stockpiles. The Energy Information Administration (EIA) report is due later on Wednesday.
The American Petroleum Institute (API) said US crude stockpiles rose by 11.4 million barrels in the week ending February 20. The prior week showed a drop of 609,000 barrels. This increase added to supply worries.
Geopolitical Tensions And Market Focus
Traders also watched US-Iran news ahead of nuclear talks on Thursday in Geneva. On Monday, the US embassy in Lebanon evacuated “dozens of its staff members” as a precaution.
US President Donald Trump said last week he was considering a limited military strike on Iran to push for a nuclear deal. He said 10 to 15 days was “pretty much” the “maximum” time he would allow talks to continue.
The EIA report could move prices if it shows a draw or a build in inventories. A bigger-than-expected draw may signal stronger demand. A larger build may point to weaker demand or added supply.
With WTI now trading near $82 a barrel, the market is still reacting to last week’s unexpected inventory news. The EIA reported a 3.5 million barrel increase for the week ending February 20, which put downward pressure on prices. This has led many traders to question near-term demand, especially with fears of a slowing global economy.
Options Strategies For A Two Sided Market
We saw a similar clash between fundamentals and geopolitics around this time in 2025. The API reported a huge 11.4 million barrel build, which suggested a supply glut. At the same time, the market was nervous about rising US-Iran tensions ahead of planned nuclear talks.
This sets up a classic push and pull, which makes simple directional trades risky over the next few weeks. One possible approach is to buy volatility using options strategies like straddles or strangles. These trades can benefit from a large price move in either direction, whether the driver is inventory data or geopolitical headlines.
In the past, when geopolitical threats did not lead to real supply disruptions, large inventory builds tended to pull prices lower. After the inventory concerns in early 2025, prices eased once the immediate Iran fears faded. Because of this, buying puts with expiries a few weeks out may help hedge against bearish supply data coming back into focus.
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