WTI US Oil traded near $65.15 on Wednesday, up 1.53%. It extended a rebound that began earlier in the week. Prices climbed on worries about global supply, linked to Middle East tensions. US–Iran relations stayed tense. This raised concerns about tougher sanctions or disruptions to Iranian exports. Reuters reported that the US may consider intercepting ships carrying Iranian crude if nuclear talks fail.

Supply Risks Back In Focus

In Asia, India cut imports of Russian oil while it holds trade talks with the US. It also increased purchases from the Middle East and West Africa. This supported demand for some crude grades. Gains were limited by higher US supply. The American Petroleum Institute reported a 13.4 million-barrel rise in US crude inventories for the week ending 6 February. This was the largest build since early 2023. Traders waited for official Energy Information Administration data to confirm or challenge the API numbers. Markets also watched upcoming reports from OPEC and the IEA. The IEA warned that global supply could exceed demand this year, which could create a surplus. WTI remained sensitive to both geopolitics and data on output, demand, and stockpiles.

Positioning And Hedging Ideas

We are seeing a familiar pattern in the oil market, similar to what we faced in February 2025. At that time, the market was pulled between Middle East supply fears and large increases in US crude inventories. Today, with WTI trading around $78 a barrel, tensions in the Red Sea are again pushing prices higher. This creates a challenging backdrop for traders. The risk of supply-chain disruptions, along with OPEC+ signaling it will keep production cuts through the second quarter, adds clear upside risk. Recent data showing China’s manufacturing PMI rising to 50.8 also points to firmer demand from Asia. We think traders may want to consider buying out-of-the-money call options on April and May contracts to benefit from any sudden price spikes. Still, strong US output is limiting the upside. Production has been near the record levels seen in late 2025. While the latest EIA report showed a smaller-than-expected inventory build of just 1.2 million barrels, overall US crude stocks remain high. This steady supply can cap how far prices climb in the short term. This push-and-pull between bullish sentiment and bearish fundamentals has lifted implied volatility in options. For some traders, that makes premium-selling strategies more attractive, such as selling cash-secured puts below the $75 support level. This can generate income while setting a defined entry point if prices pull back. We also remember the IEA’s warning last year about a possible supply surplus. That risk remains if global growth slows. Traders holding long positions may want to buy puts as protection against a sudden demand drop. This adds a layer of insurance in a market being pulled in two directions. Create your live VT Markets account and start trading now.

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