Insights 
VT 
The WTI Oil price is rising, reaching nearly $59.50 per barrel, as concerns over US-China trade tensions ease. President Trump has shown openness to a deal with China, and further talks are expected between him and President Xi Jinping in South Korea.
OPEC+ has noted that the Oil market’s current supply shortfall is anticipated to reduce by 2026. The current rise in Oil prices is further supported by tensions involving Ukraine and Russia, as the US contemplates sending long-range Tomahawk missiles to Ukraine.
Geopolitical Risk Premiums
Geopolitical risk premiums eased after the release of hostages by Hamas and Palestinian prisoners by Israel. WTI Oil remains under pressure from OPEC+ plans to increase production, which could reduce current upward price momentum.
WTI Oil, a high-quality Crude Oil primarily produced in the US, serves as a benchmark for the Oil market. Its price is influenced by global supply and demand dynamics, geopolitical events, OPEC decisions, and the value of the US Dollar.
Weekly Oil inventory reports from the American Petroleum Institute and the Energy Information Agency also impact WTI prices. These reports reveal changes in supply and demand, affecting market pricing. OPEC’s decisions regarding production quotas directly impact WTI prices, with reduced quotas typically pushing prices up.
We see West Texas Intermediate crude oil holding near $59.50, caught between positive demand signals from easing US-China trade relations and a more bearish long-term supply outlook. President Trump’s commitment to meeting with President Xi Jinping is calming fears of a trade war, which supports oil prices for now. This creates a complex environment where short-term sentiment is improving while the 2026 supply picture looks heavier.
Trading Strategies and Market Volatility
The optimistic view is reinforced by recent data from the U.S. Census Bureau, which showed a 4.5% uptick in goods traded between the US and China in the third quarter of 2025 compared to the prior quarter. This suggests that the softened rhetoric is already translating into real economic activity, potentially boosting demand for energy. For traders, this could support near-term call options with strike prices above $60, anticipating that positive headlines from the upcoming summit in South Korea could provide a further lift.
However, we must balance this against the supply side, as OPEC+ has signaled it will increase production. Recent reports show OPEC+ compliance with its production quotas slipped to 98% in September 2025, down from an average of 103% in the first half of the year, indicating more barrels are already entering the market. This expected narrowing of the supply shortfall in 2026 should cap any significant rallies, making it risky to hold long positions for too long.
This push-and-pull dynamic between geopolitical diplomacy and supply fundamentals points toward increased volatility in the coming weeks. We saw a similar situation play out in 2019, where trade war news caused sharp but temporary price spikes before fundamentals eventually reasserted control. Therefore, strategies that profit from price swings, such as purchasing a straddle (both a call and a put option), could be more prudent than placing a bet on a single direction.
Geopolitical risks from the Russia-Ukraine conflict and the Middle East, while currently subdued, remain significant wildcards that could cause sudden price shocks. The potential for the US to send new missiles to Ukraine introduces a specific risk premium that is not fully priced in. Traders should pay close attention to the weekly EIA inventory reports, as a surprise drawdown could easily fuel a short-term rally, while a build would reinforce the bearish supply narrative.
