WTI crude oil futures closed at $63.66, increasing by $0.14 or 0.22%. The trading range was tight, with a high of $63.93 and a low of $63.31.
Throughout the week, the market saw a low of $61.45 on Monday. It tested the falling 100-hour moving average, then dropped to a low of $61.67 on Tuesday. Prices then rose above the 100- and 200-hour moving averages but later returned to the 100-hour average on Thursday. Buyers stepped in to defend support, leading to a rally that reached $63.93, marking the highest point for the week.
Buyers Maintain Short Term Control
Throughout the week, the price rose by 1.05%. It remains above the 100/200-hour moving averages, indicating some control for the buyers in the short term. However, the price is still under the 100-day moving average at $64.36. It is also below the 38.2% retracement level from the late July high at $64.91. To regain more control, buyers need to push the price above these levels.
The price action shows buyers gaining some short-term control, pushing WTI crude oil above the hourly moving averages for a modest weekly gain. However, significant resistance looms overhead at the 100-day moving average of $64.36 and the Fibonacci level at $64.91. Traders should watch these two levels closely, as a failure to break and hold above them could signal that this week’s rally is merely a temporary bounce within a larger downward trend.
This technical picture is complicated by a mixed fundamental backdrop. The latest IEA monthly report, released last week, slightly lowered its Q4 2025 global demand forecast, citing recent Chinese manufacturing PMI data that unexpectedly dipped to 49.7. This concern over demand from a key consumer is acting as a cap on prices, making a sustained breakout more difficult.
On the supply side, last week’s EIA report showed a surprise U.S. crude inventory drawdown of 3.1 million barrels, which helped fuel the latter half of the week’s rally. OPEC+ has also signaled its intent to maintain current production quotas through the end of the third quarter, providing some market stability. This leaves supply relatively tight, creating a floor under the market and supporting the recent defense of the $61.50 level.
Immediate Uncertainty and Risk Premium
Adding to the immediate uncertainty, the National Hurricane Center is now monitoring a tropical system in the Atlantic with a 60% chance of entering the Gulf of Mexico early next month. The mere threat of disruption to Gulf coast production and refining operations could introduce a risk premium in the coming days. This possibility makes aggressive bearish positions risky until the storm’s path becomes clearer.
We have seen similar situations before, such as in the late summer of 2023 when prices chopped around key technical levels before macro-economic fears eventually triggered a sharp decline into the fourth quarter. That history serves as a reminder that September can be a volatile transition month for energy markets. The current setup, with price squeezed between short-term support and major resistance, suggests that volatility may be about to increase.
Given these conflicting signals, derivative traders might consider strategies that profit from a range-bound market or a sharp increase in volatility. Selling options premium through iron condors with strikes outside the $61-$66 range could be a viable strategy for the next few weeks. Alternatively, those anticipating a breakout due to the hurricane threat could look at buying straddles to capitalize on a significant price move in either direction.
