Insights 
VT 
WTI Crude Oil prices fell sharply below $60.00 per barrel, marking a decline of over 4% in its worst single-day performance since June. This drop was influenced by dashed hopes for eased tariffs between the US and China and worsened by the ongoing US government shutdown.
US President Trump announced he would not attend a trade meeting with President Xi Jinping and suggested imposing more tariffs on Chinese imports. China responded by tightening export controls on rare earth materials, which requires an export license. Trump criticised this and saw little point in further trade discussions at the upcoming Asia-Pacific Economic Cooperation summit.
Effect of Tariff Threats on Market
Donald Trump’s tariff threats have led to lower market sentiment, amidst struggles within the administration to pass a federal funding bill. West Texas Intermediate oil is a high-quality crude traded internationally, heavily affected by supply, demand, and OPEC’s production decisions.
Weekly inventory data from API and EIA are key in assessing WTI oil prices. Lower inventories can mean rising demand, while higher inventories point to excess supply. OPEC and OPEC+ production decisions are pivotal, with cuts often leading to higher prices and vice versa. These elements are vital for understanding WTI market trends and related trading strategies.
WTI crude is struggling to hold the $72 per barrel level, which feels very similar to the sharp drops we saw during the US-China trade disputes in the late 2010s. Renewed trade friction, this time over green technology subsidies, is creating the same kind of headline-driven risk that punishes investor sentiment. The market is reacting to political statements more than it is to fundamental supply and demand figures.
The latest global growth forecast from the IMF has been trimmed down to 2.7% for 2026, which is feeding fears of weakening energy demand. We also cannot ignore the long-term trend, as global electric vehicle sales accounted for over 22% of all new car sales in the third quarter of 2025, placing a structural cap on oil prices. This data suggests that any price rallies will likely be short-lived and met with selling pressure.
Supply and Inventory Analysis
On the supply side, the most recent Energy Information Administration (EIA) report showed an unexpected build in crude inventories of 3.1 million barrels, signaling that demand is already faltering. This comes after OPEC+ decided last month to hold production levels steady, a move that the market viewed as insufficient to prevent a supply glut. This combination of rising inventories and steady production leaves prices vulnerable to a further slide.
Given this bearish environment, derivative traders should consider buying put options to protect against a drop below the $70 support level. Selling out-of-the-money call options with strike prices near $78 could also be a prudent strategy to generate income, as a significant price surge seems unlikely. These positions capitalize on either a continued price decline or a period of range-bound trading.
We expect volatility to increase in the coming weeks, which presents opportunities for traders using options straddles to profit from large price swings in either direction. The current pattern of sharp rhetoric from government officials echoes the market conditions of 2019, where tweets and announcements could erase a week’s gains in a single session. Therefore, traders must be ready for sudden reversals based on diplomatic news.
