WTI fell after rising by over 1% in the previous session, trading near $64.80 in Asian hours on Thursday. Prices were pressured after EIA data showed US crude inventories rose by 8.53 million barrels last week.
Total crude stockpiles were 428.8 million barrels, about 3% below the five-year average for this time of year. Some support came from rising US–Iran tensions and ongoing plans for further talks, with timing and location not confirmed.
Middle East Risks And Oil Prices
The US President said a second aircraft carrier could be deployed to the Middle East if no Iran agreement is reached. This came as Washington and Tehran prepare to resume discussions.
US labour data showed Nonfarm Payrolls rose by 130,000 in January, after a revised 48,000 increase in December, beating a 70,000 forecast. The Unemployment Rate dipped to 4.3% from 4.4%.
OPEC kept demand growth forecasts unchanged at 1.38 million bpd for 2026 and 1.34 million bpd for 2027, and left its non-OPEC supply view unchanged. The IEA is due to publish its monthly report later today, which may point to a global surplus.
We are seeing West Texas Intermediate hover around $85 a barrel, with the market torn between conflicting supply and demand signals. This situation is very similar to what we saw back in early 2025 when prices were stuck near $65. The latest EIA report, which showed a surprise 4.2 million barrel build in US crude inventories last week, is adding to the downward pressure.
Options Positioning And Inventory Builds
Looking back at 2025, a massive 8.53 million barrel inventory jump caused a similar dip, suggesting ample short-term supply. These builds create opportunities for traders considering short-dated put options to capitalize on near-term price weakness. For historical context, we saw a similar pattern of builds precede the price correction in the fourth quarter of 2023.
However, we believe any significant downside is limited by the current geopolitical risk premium, much like the US-Iran tensions supported prices in 2025. Recent reports of renewed friction in the Strait of Hormuz serve as a powerful reminder that any disruption can send prices soaring. This persistent risk makes holding some long call options a prudent strategy to hedge against a sudden price spike.
The underlying demand picture also remains firm, providing a solid floor for prices, a scenario we also observed a year ago. The latest jobs report for January 2026 showed a healthy gain of 195,000 in Nonfarm Payrolls, keeping the unemployment rate at a low 3.9%. A resilient labor market underpins strong demand for transport fuels and reinforces the view that consumption is holding up.
We are also closely watching the major agency reports for direction, just as we did last year. OPEC’s latest monthly report kept its 2026 demand growth forecast stable at 1.2 million bpd, citing resilient economic activity in Asia. The IEA, however, is scheduled to release its outlook tomorrow and is widely expected to again flag a potential global surplus driven by non-OPEC supply growth.
