WTI is steady at around $60.60 during early European trading hours. This follows a reduced risk of tariffs after President Trump backed away from imposing them on European countries, easing geopolitical pressure.
The International Energy Agency (IEA) remains cautious about the oil market, expecting supply to surpass demand. Moreover, US crude inventories reportedly increased by 3 million barrels last week, further affecting supply levels.
Production Disruptions in Kazakhstan
Production in Kazakhstan has faced temporary disruptions due to two fires. Tengizchevroil, led by Chevron, has halted work at the Tengiz and Korolev oilfields as a result of these incidents.
WTI Oil, a top-quality crude originating from the United States, is a global market benchmark. Its price is influenced by supply, demand, geopolitical events, and the US Dollar, given oil’s predominant trading in this currency.
Weekly reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) significantly impact WTI prices. These reports trace changes in inventories, with falling stocks suggesting increased demand and soaring stocks indicating boosted supply. OPEC’s production decisions also play a vital role in price movements.
Looking back to this time in 2025, we saw WTI prices holding steady around $60.60 per barrel. The market was caught between easing geopolitical tensions, like the brief dispute over Greenland, and significant oversupply concerns from the IEA. This created a sideways market where there was little conviction to chase prices higher.
Market Dynamics in 2025
Today, the picture is quite different with prices trading significantly higher, recently touching $78.20. The oversupply fears from last year never fully materialized, largely due to stronger-than-expected demand recovery in Asia and disciplined production quotas from OPEC+. This fundamental shift has changed the trading landscape from range-bound to a more defined uptrend.
The supply overhang that capped prices has eased considerably, a fact supported by current inventory data. The latest Energy Information Administration (EIA) report showed a surprise inventory draw of 2.1 million barrels. This is a stark contrast to the 3-million-barrel build we observed a year ago this week.
Given the higher price and renewed tensions in the Strait of Hormuz, we should anticipate increased volatility in the coming weeks. Traders should consider options strategies that profit from price swings, such as long straddles, rather than simply betting on direction. The muted reaction to minor political news in 2025 has been replaced by sharp responses to any hint of supply disruption.
We should also watch for opportunities in calendar spreads, as the market structure has tightened. The fears of a supply glut last year have given way to concerns about a tight market, which could push front-month contracts to a greater premium over later-dated ones. This suggests positioning for a steepening backwardation could be a profitable trade.
