By Linh Tran, Market Analyst at XS.com
WTI has recorded two consecutive recovery sessions, reclaiming the USD 60 per barrel level and touching around USD 60.5. This move suggests that short-term selling pressure has eased somewhat after the previous corrective phase. However, to properly assess the nature of this rebound, it is necessary to clearly examine both the supporting factors behind prices and the risks that still persist in the near term.
First, a weaker US dollar has been a key underlying factor supporting WTI’s recovery. In recent sessions, the DXY index has retreated to around 98.4, with intraday lows near 98.2–98.3, reflecting renewed downward pressure on the USD against major currencies. A softer dollar makes USD-denominated commodities, including oil, more attractive, while also improving overall risk sentiment across financial markets.
In addition, geopolitical risks related to Iran appear to be easing, as the likelihood of a direct escalation of conflict with the US is now assessed to be lower than in the previous period. This has reduced headline-driven volatility, allowing oil prices to stabilize and stage a technical rebound following the earlier decline.
Another important factor improving market sentiment is President Trump’s decision to temporarily postpone the implementation of tariffs on the EU after reaching a framework agreement related to Greenland. Previously, Trump had threatened to impose a 10% tariff from 1 February 2026, with a further increase to 25% from 1 June 2026 if no agreement was reached. The decision to delay these tariffs has reduced the risk of a renewed trade confrontation between the US and Europe, thereby improving global growth expectations and supporting sentiment toward cyclical assets such as crude oil.
On the demand side, signals from China have turned more constructive, playing a meaningful role in WTI’s recent rebound. Data show that China’s GDP grew by 5.0% in 2025, meeting the government’s growth target, while Q4 2025 GDP expanded by 4.5% year-on-year. More importantly for the oil market, China’s crude oil imports in December 2025 reached approximately 13.18 million barrels per day, up 17% year-on-year and marking a record high, while the full-year 2025 average stood at 11.55 million barrels per day, up 4.4% from the previous year. At the same time, refinery throughput in 2025 increased by around 4.1%, indicating that energy consumption has remained resilient despite earlier concerns about economic growth.
That said, it is important to emphasize that the factors weighing on oil prices, while having eased, have not disappeared entirely. Tensions in the Middle East have only temporarily subsided and have yet to be fully resolved. The US–EU trade issue is merely postponed rather than eliminated. Meanwhile, Venezuela remains a supply-side wildcard, as potential policy changes or adjustments to its oil exports could affect the medium-term supply balance, even though the short-term impact remains difficult to quantify.
Therefore, in my view, the current recovery in WTI does not yet represent the start of a strong and sustainable uptrend. This move is better interpreted as a technical rebound, driven by a weaker USD, temporarily easing geopolitical and trade risks, and short-term positive demand signals.
In the near term, the key catalyst the market is waiting for remains the supply–demand balance, particularly through US crude oil inventory data. As the official inventory report has not been released on the usual schedule this week, the market is staying cautious and trading within a narrow range. If inventories rise more than expected, downside pressure could re-emerge. Conversely, if inventories fall or increase less than forecast, WTI may be able to consolidate current levels and extend its rebound.
In summary, ahead of inventory confirmation, I believe WTI is likely to continue trading sideways with a slight positive bias, within the USD 59–62 per barrel range. This range reflects a market in wait-and-see mode, where upside momentum has emerged but is still insufficient to define a clear trend.