Insights 
VT 
West Texas Intermediate (WTI) US Crude Oil prices rise to nearly a two-week high during the Asian session on Monday. The commodity trades with a mild positive bias below the $61.00 handle as traders await a joint statement from the US and China regarding trade talks.
A trade agreement between the US and China was announced following a meeting in Switzerland, easing demand concerns and supporting Crude Oil prices. However, no agreement on reducing US tariffs of 145% on Chinese goods and China’s 125% tariffs on US goods was mentioned, prompting caution among traders.
Factors Influencing Crude Oil Prices
Market optimism mitigates US recession fears, coupled with the Federal Reserve’s hawkish pause aiding the US Dollar, which is near a multi-week high. Additionally, OPEC+’s decision to increase output raises oversupply concerns, limiting Crude Oil price increases, while expectations for tighter US supplies and geopolitical risks provide some upward pressure.
WTI Oil is a high-quality Crude Oil benchmarked with major types like Brent and Dubai Crude. Factors such as global growth, political issues, OPEC decisions, and US Dollar value are key price determinants. Weekly Oil inventory reports from the API and EIA also influence WTI Oil pricing, reflecting supply and demand shifts.
As prices hover just beneath the $61.00 threshold, the recent strength in WTI appears to be fuelled more by the promise of dialogue than by anything definitively resolved. The agreement hailed from the talks appears, at this stage, simply to be a preliminary gesture – something more symbolic than structural – with tariffs untouched for now. Lighthizer’s stance remains guarded, and Liu’s reluctance to concede may hint that this period of calm could prove short-lived.
What we’re seeing now is the market attempting to price in what is, at best, an extended pause in hostilities between the world’s two largest economies. On the surface, that does lighten the mood and ease short-term demand anxieties, but beneath it all, nothing has been structurally altered. We shouldn’t treat current price strength as grounded in firmness; it’s largely a response to the easing of pressure, not its removal.
Market Sentiment and Price Drivers
The Federal Reserve’s tone adds another layer. Powell’s affirmation of a hawkish pause gives strength to the Dollar, and with it, adds weight to commodity pricing in greenbacks. From our view, any resilience in the Dollar effectively dampens enthusiasm in energy contracts, especially for those trading in non-dollar settings. This firmness can directly apply downward pressure on Crude pricing, a factor that continues dragging on any sustained breakout beyond immediate resistance levels.
Meanwhile, with OPEC+ choosing to raise production, we’ve now got a case of supply potentially running ahead of demand expectations again. Saudi Arabia and Russia are clearly banking on sustained growth to absorb the additional barrels, but the market doesn’t seem entirely convinced – at least, not yet. There’s still a perceptible gap between headline production decisions and the actual adjustment in inventories. The increase in output is now running into the narrative of reduced global consumption growth and tepid refinery activity in Asia.
This is partially offset by narrowing US inventories and, more worryingly, slow-simmering geopolitical flare-ups, particularly around the Strait of Hormuz. Although neither has broken sharply into pricing mechanisms this week, they haven’t been dismissed either. If we think in terms of exposure and coverage, these risks remain embedded, and they keep a floor beneath near-term pricing.
Every Tuesday and Wednesday we receive fresh figures from both the American Petroleum Institute and the Energy Information Administration. These are becoming even more central now. If we see draws above consensus, particularly from Cushing, that can carry prices higher – but if stockpiles rise unexpectedly, any optimism could quickly unwind. We’ll need to react quickly to shifts in those numbers, especially with volatility in spreads creeping up again.
From here, it’s essential to temper optimism with measured caution. Price action is being driven by soft drivers right now – sentiment, expectations, language. Until the gap between talk and policy closes, movement remains vulnerable. For now, we’re watching spreads in the near contracts against longer-dated strips. If contango steepens, it may signal traders hedging against softness in the back half of the year. That, in turn, might pressure open interest and skew positioning toward downside protection.
Watch the Dollar. Monitor inventory reports as they land. Dissect OPEC commentary, particularly secondary source compliance data. Geopolitical risks aren’t just background noise anymore – they’re shaping the risk profile of long exposure. Price is firm, but it is not secure, and with sentiment being the main driver here, shifts may come faster than expected.
