Insights 
VT 
West Texas Intermediate (WTI) oil prices reached approximately $57.55 in early Asian trading on Wednesday. This rise is attributed to easing trade tensions between the US and China, overshadowing the potential impact of a stronger US dollar and concerns about excess oil supply.
The American Petroleum Institute (API) reported a decrease of 2.98 million barrels in US crude inventories for the week ending October 17. This follows a previous increase of 3.524 million barrels, indicating a net loss for the year of 2.423 million barrels.
Us China Trade Tensions
US Treasury Secretary is scheduled to meet with Chinese officials to discuss trade tensions prior to a potential meeting between President Trump and President Xi Jinping. Any reduction in trade tensions could impact WTI prices, as the US and China are significant consumers of crude oil.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+) plan to increase oil supply, which may result in a surplus. The International Energy Agency (IEA) has projected a global surplus of nearly 4 million barrels per day by 2026, which could limit the rise in WTI prices.
Looking back, it is interesting to see WTI crude oil trading near $57.50, driven by easing US-China trade tensions under a previous administration. Today, on October 22, 2025, the landscape is very different, with WTI currently hovering around $85 a barrel. The fundamental drivers have evolved, but geopolitical tensions and supply data remain as critical as ever for market direction.
Unlike the inventory draw seen back then, the latest Energy Information Administration (EIA) report for the week ending October 17, 2025, showed a surprise build of 1.5 million barrels. This was unexpected, as analysts had predicted a modest draw, signaling potentially weaker consumer demand in the US. This data is putting some downward pressure on prices, capping the recent rally we’ve seen this month.
Opec Production Cuts
On the supply side, we see OPEC+ holding firm on its production cuts, which is the primary reason prices have found strong support above $80. The group has signaled it will maintain its current output policy through the end of the year to ensure market stability. This disciplined approach contrasts with earlier predictions from the IEA, which in the past had forecast a significant supply surplus for 2026.
Global demand concerns are also resurfacing, which traders must watch closely. The International Monetary Fund (IMF) recently trimmed its global growth forecast for 2026 from 3.2% to 3.0%, citing persistent inflation in major economies. This softer economic outlook could translate into weaker oil demand down the line, weighing on prices.
Given these conflicting signals of a surprise inventory build against tight OPEC+ supply, we should prepare for increased volatility in the coming weeks. Traders might consider strategies that benefit from sharp price swings, such as purchasing straddles or strangles. Using options to define risk seems prudent, with puts offering a hedge against a potential drop towards the low $80s.
The key events to watch will be the next weekly EIA inventory report and any statements from officials ahead of the next formal OPEC+ meeting in early December. Any deviation from the expected supply cuts or a further significant build in US stockpiles could trigger a major price move. Traders should remain nimble and ready to react to this incoming data.
