Oil market fundamentals suggest a potential decrease in prices, according to TD Securities’ analysis. A recent report points out that relaxed short-term fundamentals might drop crude oil prices by $2-3 per barrel. The easing of supply issues is facilitated by increased exports from significant regions, which also influence market conditions.<\/p>\n
Export flows from the port of Novorossiysk are expected to improve, as maintenance at the CPC terminal’s SPM-3 is now complete. Additionally, a halt in China’s inventory stockpiling in January reduces near-term demand, causing a fall in inventories over the month. This period also coincides with the peak refinery turnaround season, decreasing refinery demand and leaving more barrels on the market.<\/p>\n
Geopolitical risks remain a contributing factor to market dynamics, with potential events in Iran able to reverse the predicted changes. However, easing geopolitical risk premiums could lead to further price reductions if they align with weakening fundamentals. The combination of changing supply and demand conditions presents a situation where prices might see a downturn.<\/p>\n
With fundamentals pointing to a softer market, we see crude oil prices potentially falling by at least $2-3 per barrel in the near term. The rally we saw in late 2025 appears to be losing steam as both supply and demand factors are now weighing on the market. This shift suggests that bearish positions may become profitable over the next few weeks.<\/p>\n
On the supply side, earlier disruptions are clearly abating. We’ve seen maritime data confirming that Russian seaborne exports from key ports like Novorossiysk have now climbed back above 3.6 million barrels per day, a level not consistently seen since the third quarter of 2025. This increase in available barrels adds direct pressure to spot prices.<\/p>\n
Simultaneously, near-term demand is weakening, led by a notable pause in Chinese inventory building this month. Official customs data shows January’s crude imports into China fell by 4% compared to the December 2025 average, reinforcing the view that their strategic stockpiling has slowed. This coincides with the start of peak refinery turnaround season, which will further reduce crude demand through February and March.<\/p>\n
Considering this outlook, we believe establishing bearish positions is a prudent strategy. Buying March or April WTI put options with strike prices a few dollars below the current market level provides a clear, risk-defined way to profit from the expected pullback. This is a straightforward approach to position for the anticipated drop in crude prices.<\/p>\n
The view that aggressive backwardation will ease also signals an opportunity in calendar spreads. We are looking at selling the front-month contract and buying a deferred contract, such as selling March and buying June futures. This position would profit if the price of near-term oil falls faster than the price of oil for later delivery.<\/p>\n
However, we must remain aware that a significant supply disruption, especially one involving Iran, would neutralize this bearish thesis. Geopolitical flare-ups remain the primary risk to any short position. Therefore, any bearish trades should be managed with disciplined stop-losses to protect against a sudden reversal.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Eased supply constraints and reduced demand may lower oil prices by $2\u20133, TD Securities reports.<\/p>\n","protected":false},"author":62,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-40565","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/40565","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=40565"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/40565\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=40565"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=40565"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=40565"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}