Insights 
VT 
WTI Oil prices have dropped to a five-month low of $56.52, with current trading around $56.70 per barrel. Concerns are rising over global energy supplies.
President Trump and President Putin are set to meet in Hungary to discuss ending the war in Ukraine, which could lift restrictions on Russian Oil, thus increasing global supply. Meanwhile, Ukrainian President Zelenskiy plans to meet Trump in Washington seeking more military aid.
Global Supply Concerns
India and China face US pressure to stop importing Russian Oil. Nonetheless, Indian refiners aim to reduce imports, waiting for further instructions from New Delhi after Trump’s announcement about halting purchases.
The Energy Information Administration reported a 3.524 million-barrel rise in US crude inventories last week, surpassing expectations of a 0.12 million-barrel increase. The rise is attributed to reduced refinery operations due to fall maintenance.
Trade tensions between the US and China continue, with US officials criticising China’s plans on rare earth exports. The US sees these actions as “economic coercion” and a “global supply chain power grab.”
WTI Oil, known for its high quality, is a significant player in the international market. Factors like supply-demand dynamics, global growth, political events, and OPEC decisions all influence its price. Inventory data from API and EIA also critically impacts price movements.
With WTI crude oil breaking down to a five-month low near $56.50, we should prepare for further downside pressure in the coming weeks. The primary driver is the growing fear of oversupply, which has been intensified by a potential peace deal in Ukraine. This move follows a period where prices were trading above $70 as recently as August 2025, making the current drop significant.
Market Implications
The upcoming meeting between President Trump and President Putin is the most important factor to watch, as any resolution in Ukraine would likely ease restrictions on Russian oil exports. We saw a similar pattern back in 2015 when the Iran nuclear deal was announced, leading to a multi-month decline in oil prices as the market priced in future supply. A positive outcome from the Hungary meeting could flood the market with millions of barrels of Russian crude.
Domestically, the supply picture is also bearish, after the EIA reported a surprise inventory build of over 3.5 million barrels. This marks the fourth consecutive week of inventory builds, a trend we haven’t seen since the spring of 2024. US crude production has also remained robust, hovering near a record 13.2 million barrels per day through the third quarter of 2025.
On the demand side, escalating trade tensions between the US and China are creating significant headwinds for global growth. Recent data from the World Trade Organization projects a slowdown in global trade for the final quarter of 2025, directly linked to these frictions. This points to lower energy consumption from the world’s two largest economies, further weighing on oil prices.
For derivative traders, this environment suggests that buying put options on WTI futures could be a prudent strategy to profit from further price declines. Alternatively, selling call credit spreads would allow traders to benefit if prices remain stagnant or continue to fall. These positions offer defined risk while capitalizing on the current bearish sentiment.
Those trading futures contracts might consider initiating short positions, targeting support levels from early 2025 around the $52-$54 range. Implied volatility in WTI options has increased with this sharp price move, making selling premium an attractive strategy. Look for key technical levels to break before adding to bearish positions.
