WTI futures on NYMEX fell 1.5% to about $97.20 in Asian trading on Wednesday, after rising almost 8.5% over the previous two sessions. The move followed April US inflation data that raised concerns about oil demand.
US headline CPI was 3.8% year-on-year, compared with estimates of 3.7% and a prior reading of 3.3%. Core CPI was 2.8% year-on-year, versus estimates of 2.7% and the previous 2.6%.
Higher inflation can support higher US interest rates for longer, which can weigh on oil prices. CME FedWatch showed the odds of at least one US rate rise this year increased to 33.4% from 23.5% before the CPI release.
Prices had risen as US-Iran talks did not produce a breakthrough, feeding concerns about disruption around the Strait of Hormuz. US President Donald Trump said the US did not need help to reach an Iran deal, ahead of a possible discussion with China’s leader Xi Jinping during a May 13–15 visit to Beijing.
WTI (West Texas Intermediate) is a US-sourced, light, sweet crude benchmark traded via the Cushing hub. Its price is driven mainly by supply and demand, the US dollar, geopolitical events, OPEC output policy, and weekly inventory data from API and EIA.
We are looking at a very different market landscape compared to this time in May 2025, when WTI was trading near $97 a barrel. Back then, fears were driven by a hot US CPI print of 3.8%, which fueled concerns about aggressive Federal Reserve rate hikes. Currently, with WTI trading closer to $82 a barrel, the immediate pressures appear to have shifted.
The inflationary picture has cooled considerably since we saw the 3.8% headline number in April 2025. The latest data for April 2026 showed headline CPI easing to 3.2%, changing the calculus for the Fed. Instead of pricing in rate hikes, the CME FedWatch tool now indicates a 65% probability of at least one rate cut before the end of this year, which could support oil demand.
While the focus in May 2025 was on the US-Iran deadlock and former President Trump’s rhetoric, today’s supply-side risks are more centered on OPEC+ discipline. We are closely watching compliance with existing production quotas, especially from key members like Russia and Iraq. This makes any statements from their energy ministers more impactful than the diplomatic standoffs of last year.
This shift from high inflation and acute geopolitical fears in 2025 to a more managed economic outlook suggests that implied volatility in oil options may be overpriced. We should consider strategies that benefit from this, such as selling covered calls on existing long positions or exploring put-selling strategies if we anticipate a floor around the $78-$80 level. Last week’s EIA report, which showed a surprise inventory build of 2.5 million barrels, adds to the short-term pressure capping the upside.
Looking ahead, positioning should be nimble, with a focus on the upcoming OPEC+ meeting in June 2026 for guidance on second-half production policy. We need to be wary of any sudden breakdown in their production discipline, which could introduce downside risk. For now, the environment seems less about the sharp, headline-driven spikes we saw in 2025 and more about a range-bound market influenced by economic data.
