Insights 
VT 
West Texas Intermediate (WTI), the US crude oil benchmark, fell to around $59.90 in early Asian trading on Tuesday. This decline was influenced by a stronger US Dollar and concerns over global energy demand. The upcoming American Petroleum Institute (API) weekly crude oil stock report and the Organisation of the Petroleum Exporting Countries (OPEC) monthly oil market report are set to be released.
Saudi Arabia recently reduced the price of its major crude grade to Asia, marking the lowest level in 11 months. OPEC+ announced an increase in production by 137,000 barrels per day in December, with plans to halt production hikes in Q1 next year. This has raised fears of a possible global oversupply. Meanwhile, efforts towards reopening the US government may offer some support to WTI prices.
WTI Oil Analysis
WTI Oil is a premium grade crude known for its low sulfur content. Its price is driven by global supply and demand, political events, and decisions made by OPEC. Regular inventory data from organisations like API impacts prices, with lower inventories suggesting higher demand. OPEC influences prices by setting production quotas among its member countries and affiliates.
With WTI crude dipping below the key $60 level, we are seeing renewed pressure on oil prices driven by a firmer US Dollar. This situation echoes the demand concerns that have surfaced throughout 2025, especially with recent purchasing managers’ index (PMI) data from China showing a slowdown in manufacturing. The Dollar Index (DXY) has climbed to a three-month high of 106.50, making oil more expensive for international buyers.
The announcement that OPEC+ could slightly increase production, even temporarily, is a significant shift from the strategy of deep cuts we saw them implement through much of 2023 and 2024. We remember how those cuts helped establish a floor for prices above $70, so any sign of loosening supply discipline could lead to further downside. Traders should watch the upcoming OPEC monthly report very closely for shifts in the group’s forward guidance.
Saudi Aramco Pricing Strategy
Saudi Arabia’s decision to cut its official selling prices to Asia is a powerful signal of weakening demand, confirming what many of us have suspected. This move is particularly concerning as it suggests the world’s largest exporter is competing for market share in a softer market. Adding to this, last week’s EIA report showed a surprise inventory build of 2.1 million barrels, against expectations of a draw, suggesting supply is outpacing current consumption.
While talk of the US government reopening might offer temporary support, we view this as a minor factor against the larger backdrop of global supply and demand fundamentals. We’ve seen similar political events in the past, like the shutdown in late 2018, and their direct market impact tends to be fleeting. Therefore, traders should consider positioning for further weakness by looking at buying put options or establishing bear call spreads to hedge against a potential slide towards the $55 support level in the coming weeks.
