West Texas Intermediate futures rallied more than 4% over the past two trading sessions, reaching their highest level since early December. Traders pointed to the arrival of a U.S. carrier strike group in the Persian Gulf as a key driver, with geopolitical risk premium expanding by an estimated $2.50 per barrel. Analysts at Energy Aspects reported that prompt WTI Brent spreads have deepened into a backwardation of $1.30, signaling tightening near-term supply. Market participants also noted a surprise draw of 2.8 million barrels in U.S. commercial crude stocks in the week to January 22, according to the U.S. Energy Information Administration, further underpinning bullish sentiment.

After the steep run-up, WTI gave back 1.7% on profit-taking and positioning shifts. The CFTC’s latest Commitments of Traders data showed that speculative short positions on WTI fell by 15,000 contracts last week, while longs increased by 10,000. With the polar vortex now receding from key consumption hubs, U.S. refinery runs rose to 93.5% of capacity—up 1.2 percentage points week-on-week—reducing immediate demand for seaborne crude. Traders are also awaiting further signals from Washington on potential military action, keeping a cap on near-term gains.

WTI’s front-month contract has broken above its 50-day moving average for the first time since November, triggering technical buy-signals. Floating storage of crude on tankers has fallen to 78 million barrels, down 8% since the start of January, according to Kpler data, suggesting that the offshore glut is quietly draining. On the demand side, refiners in China and India have ramped up imports by 14% year-on-year in January, while Venezuelan exports remain constrained at around 600,000 barrels per day due to maintenance issues. Strategists at JP Morgan project that WTI could revisit the $65 level if these patterns persist into February.