West Texas Intermediate (WTI) Oil price decreased to $60.19 per barrel during the European session, down from $62.27. Brent Oil also fell, trading at $63.55 compared to its previous close of $65.48.
WTI Oil, a high-quality crude, is primarily sourced from the US and distributed via the Cushing hub. It is influenced by supply and demand dynamics, global economic growth, and geopolitical events affecting supply.
Role Of Inventory Reports
Inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) shape WTI prices, as they reflect changes in supply and demand. OPEC’s production decisions further affect the price of WTI Oil through quota adjustments.
Given yesterday’s pressure on crude benchmarks, both WTI and Brent saw extended weakness as we moved through the European hours. WTI declined more than $2 per barrel, with a similar trajectory mirrored in Brent futures. That’s a fairly direct reaction to shifts in expectations around stockpile data and broader global growth forecasts – which, if anything, seem to be softening slightly.
For us, the key focus now becomes the upcoming data from the EIA. We’ve already seen API estimates pointing towards a build, and if the agency’s figures offer confirmation, we may enter a stretch where bearish sentiment persists. Inventory builds of this kind usually reflect either a slowdown in consumption or a supply imbalance; in either case, speculative positioning tends to lean short.
The role of OPEC can’t be brushed aside either. Previous meetings have set quotas with the aim of stabilising prices, but any deviation from expected output targets can send futures fluctuating within hours. Quota discipline, or lack thereof, has a measurable effect on forward curves, which then ripple through to front-month contracts.
Impact Of Volatility
Volatility tends to rise in thin liquidity environments – and we’re in one. That means heightened sensitivity to any unexpected news, particularly around geopolitical hotspots or refining disruptions. Recent disruptions in supply routes, although limited, have already shown how quickly spreads can widen.
Those of us trading options or spreads need to reassess short gamma exposure, especially with implied volatility compressing on the back of a multi-day decline. Moves in front-month contracts have been rapid, but they’re not yet chaotic. What we’re likely to observe is a tighter coiling of price action unless headline drivers emerge.
Contango structures in the short end of the curve continue to suggest oversupply in the immediate term. That scenario pushes storage economics back into favour. As prices fall, the incentive to hold physical barrels improves—particularly for those entities with access to low-cost storage or pipeline contracts. It’s not just paper markets reacting; the physical side has begun repositioning too.
In managing exposure across multiple maturities, we must remain alert to any divergence in time spreads. A steepening curve or sudden flattening can hint at structural shifts faster than outright price moves. Long calendar spreads may find short-term pressure but could offer opportunity if the market begins pricing in tighter balances into Q3.
With macroeconomic releases scheduled from both the US and China later this week, we are likely to see demand forecasts adjusted once more. Brent is more exposed to international shipping patterns, while WTI remains somewhat insulated. That differential is likely to grow in importance for cross-positioning strategies. Watch out for shifts in refining margins, especially as summer driving season looms. Rising crack spreads could offer a floor.
We will continue adjusting our short-term bias to price developments, but it’s how traders position ahead of EIA data that could define momentum through to next week. We’re watching implied vols, spreads, and trade flows for clues – and there’s plenty starting to move beneath the surface.
