The price of West Texas Intermediate (WTI) crude oil dropped to around $56 during Thursday’s trading in Asia. This decline was fueled by optimism over a possible peace deal between Russia and Ukraine, which might help restore Russian crude oil supplies to the market. However, the U.S. government’s block on Venezuelan oil tankers may prevent further drops in WTI’s price. Additionally, U.S. crude oil inventories decreased by 1.274 million barrels last week, according to the Energy Information Administration. This decline was larger than analysts had expected for the week ending December 12.

WTI as a Benchmark

WTI oil is significant in the global oil market. It has low gravity and sulfur content and is produced in the United States. Prices for WTI are influenced by supply and demand, global economic growth, and political events. The value of the U.S. Dollar also plays a role since oil is primarily traded in dollars. Reports on inventory from the American Petroleum Institute and the Energy Information Administration can impact WTI prices. Changes in these reports can indicate shifts in supply and demand. Decisions made by OPEC regarding production quotas, usually announced twice a year, also affect prices by adjusting oil supply. The OPEC+ group, which includes other oil-producing countries like Russia, has a significant influence. Looking back to when WTI was around $56 a few years ago, the main concerns were the possibility of peace in Ukraine and a U.S. blockade on Venezuela. As of December 18, 2025, the situation has changed dramatically with crude oil prices at about $81 per barrel. New market factors require a different approach for trading derivatives in the upcoming weeks.

Changes in the Oil Market

The previous worries about a peace deal flooding the market with Russian oil have shifted. We now face the ongoing conflict that started in 2022. The market has adjusted to rerouted Russian supply lines and ongoing sanctions. Instead of hoping for a sudden increase in supply due to peace, we are focused on OPEC+ production decisions that maintain steady prices. Additionally, the bullish impact of the U.S. blockade on Venezuela has changed. In a significant policy shift in late 2023, the U.S. eased sanctions, allowing more Venezuelan oil into the global market to stabilize prices. This means that a previously strong price support is now turning into an additional source of supply, which we must consider in our risk assessments. Recent inventory data presents a new picture compared to past drawdowns. The latest EIA report showed an increase in crude oil inventory of 3.6 million barrels, surprising analysts who expected a decrease. This could suggest weaker consumer demand as we enter the new year, a bearish indicator for traders to monitor. With mixed signals of OPEC+ supply management versus weakening demand, there is a potential for significant price fluctuations. Traders might want to use options strategies that can benefit from this volatility, such as buying straddles or strangles. For those with a specific direction in mind, purchasing call options could take advantage of any further OPEC+ production cuts, while put options might protect against a global economic slowdown. Create your live VT Markets account and start trading now.

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