Crude prices fell for a fifth straight session on Wednesday, with West Texas Intermediate at $86.60 a barrel, more than $4 lower so far this week. Fighting between the US and Iran added fresh tension to an already fragile ceasefire, yet the moves failed to generate a sustained lift in oil. Iran\u2019s Islamic Revolutionary Guards Corps said it struck US bases in Bahrain, Jordan and Kuwait after a US attack on defence and radar systems in southern Iran. Separately, reports said Israeli strikes in southern Lebanon killed six people.<\/p>\n
Traders have largely looked through repeated ceasefire breaches, leaving prices well below $100 a barrel. Later on Wednesday, the Energy Information Administration is due to publish its weekly Oil Stocks Change report, forecast to show a seventh consecutive decline, including a 4 million-barrel draw in the week of 5 June after a near 8 million-barrel fall the prior week. Commercial oil inventories are described as at their lowest level since 2003, while the data release is expected to influence WTI\u2019s near-term downside.<\/p>\n
We observe that the market is currently overlooking geopolitical flare-ups, focusing instead on hopes for a diplomatic solution between the US and Iran. This sentiment is creating a disconnect between the falling price and tightening physical supply. We believe this presents a window of opportunity for bullish positions in the coming weeks.<\/p>\n
The upcoming EIA report is expected to confirm a 4 million barrel draw, bringing US commercial inventories close to 425 million barrels, the lowest for this time of year since 2003. Recent data also shows OPEC+ production discipline remains high, with compliance holding firm above 100% last month. This supply tightness is running head-on into forecasts of record summer gasoline demand in the US, projected to exceed 9.5 million barrels per day.<\/p>\n
Given the expected supply shortage in July and August, we are positioning for a rebound by acquiring call options. Specifically, we are looking at August WTI contracts with strike prices in the $90 to $95 range. These options allow us to capture potential upside while the current downtrend has made their premiums relatively inexpensive.<\/p>\n
This setup is reminiscent of market conditions in mid-2022 when fundamental supply tightness eventually overpowered recessionary fears, causing a significant price rally. The market’s current complacency towards Mideast tensions is creating a similar dynamic. We see the current price of $86.60 as an attractive entry point before the supply reality forces prices higher.<\/p>\n","protected":false},"excerpt":{"rendered":"
WTI slid fifth day to $86.60 despite U.S.-Iran tensions; inventories tighten, prompting bullish call-option positioning.<\/p>\n","protected":false},"author":103,"featured_media":41758,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[104,109,108,66,93],"class_list":["post-54837","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-bullish","tag-markets","tag-middle-east","tag-oil","tag-reports"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/54837","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\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=54837"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/54837\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/41758"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=54837"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=54837"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=54837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}