Insights 
VT 
Weekly Inventory Reports
Weekly inventory reports from the American Petroleum Institute (API) and Energy Information Agency (EIA) affect WTI prices by indicating supply and demand changes. A drop in inventories can lead to higher prices, while increased inventories may lower them. API publishes data on Tuesdays, with EIA following on Wednesdays, and their results are usually similar.
The Organisation of the Petroleum Exporting Countries (OPEC) impacts WTI prices by setting production quotas. Reducing quotas can increase prices by tightening supply, while increasing production can lower them. OPEC+ includes additional non-OPEC members, significantly influencing market dynamics.
Given the bearish opening for WTI at $56.79, we are seeing continued pressure on crude prices that reflects a broader trend of economic softening. This price level is significantly lower than the averages we saw back in 2023 and 2024, indicating a fundamental shift in market dynamics. The coming weeks will likely be defined by persistent concerns over global demand.
Recent data reinforces this cautious outlook, as China’s third-quarter GDP growth for 2025 came in at a disappointing 4.2%, below market expectations. In Europe, the latest manufacturing PMI figures from September registered at 48.5, signaling a continued contraction in industrial activity. We believe these figures point to a sustained period of lower energy consumption.
Supply and Market Dynamics
On the supply side, the decisions from OPEC+ have not been enough to support prices. The group’s last meeting in Vienna in September 2025 resulted in a rollover of existing production quotas, but we’ve seen market reports suggesting compliance from key members like Russia has weakened. This excess supply is hitting the market at a time when it is least needed.
Inventory reports from the Energy Information Agency (EIA) have confirmed this supply glut. This week’s data showed a surprise build of 2.1 million barrels, defying analyst predictions for a slight draw and marking the third build in four weeks. This trend suggests that supply is consistently outpacing demand in the United States.
Furthermore, the strength of the US Dollar continues to be a headwind for oil. With the Federal Reserve signaling last month that interest rates will likely remain elevated into 2026 to combat persistent services inflation, the Dollar Index has hovered near 107. A strong dollar makes crude more expensive for buyers using other currencies.
For derivative traders, this environment suggests that selling into any price rallies may be the most prudent strategy. We see potential for WTI to test the $55 support level in the near term. Options strategies like buying puts or establishing bear call spreads could be effective tools to position for further downside or range-bound trading.
