Crude Oil prices fell on Thursday as supply worries eased and geopolitical news took focus. WTI dropped below $63.00 a barrel.
WTI moved lower as markets weighed the chance of reduced US-Iran tensions. Traders also questioned expectations of a strong rise in demand from China.
Global Demand Outlook Shifts
The International Energy Agency cut its outlook for global crude demand on Thursday. It cited weaker-than-expected demand growth in parts of Asia and a still-high market surplus, despite brief supply constraint fears in January.
Comments attributed to Israel’s Benjamin Netanyahu suggested Donald Trump and Iran’s Ali Khamenei may be moving towards a deal. WTI fell over 3.5% from the day’s open at the time of writing.
Prices were also nearing $62.00. That level sits close to the 200-day Exponential Moving Average (EMA).
We remember when WTI prices broke below $63 a barrel in early 2025, as that period set the stage for the current market. The slide was caused by easing U.S.-Iran tensions and the first real signs that China’s post-pandemic demand boom was a myth. Those two themes have kept a lid on prices for much of the past year.
Supply Demand Balance
The supply pressure from the United States has been relentless, preventing any sustained rally. The latest Energy Information Administration (EIA) report confirmed that U.S. crude output averaged a record 13.3 million barrels per day in the final quarter of 2025. This gusher of American oil has largely offset the ongoing production cuts from OPEC+, which the group just extended through the second quarter of 2026.
On the demand side, the skepticism from last year was warranted, as China’s economic engine has not roared back to life. We saw its manufacturing PMI hover just above the 50-point mark for most of late 2025, indicating stagnation rather than the strong growth needed to absorb surplus oil. With European economic forecasts also being trimmed, global demand growth for 2026 is looking muted at best.
Given this environment of high non-OPEC supply and lukewarm demand, selling call options seems to be the most prudent strategy for the weeks ahead. With WTI currently trading in a range near $71, selling calls with strike prices at $77 or higher for April expiration allows traders to collect premium from expected range-bound price action. This strategy profits if the price moves sideways or drifts lower, which seems likely.
However, we must remain alert to geopolitical headlines from the Middle East. The potential deal between the U.S. and Iran discussed last year never fully solidified, leaving a layer of tension in the region. Any unexpected disruption to shipping lanes in the Strait of Hormuz could cause a rapid price spike, making it essential to protect short-volatility positions with defined risk.
