Eight OPEC+ members decided to reduce their production restrictions further. Instead of previous larger increases, they opted for a smaller production increase of 137,000 barrels per day. <\/p>\n
From April to September, OPEC\u2019s production increased by 1.7 million barrels per day, averaging 340,000 barrels monthly. Initially, oil prices climbed but soon lost those gains due to the already favourable supply outlook.<\/p>\n
The recent decision by OPEC+ to increase production, even by a modest 137,000 barrels per day, suggests a bearish outlook for oil prices. We saw the market struggle to hold onto gains after the announcement, signaling that supply concerns are easing. This points towards a well-supplied market for the remainder of the fourth quarter.<\/p>\n
This view is strengthened by the latest Energy Information Administration (EIA) report from last week, which showed an unexpected build in U.S. crude inventories of 2.8 million barrels. With current WTI crude prices hovering around $79 per barrel, this additional supply weighs on a market that is already showing signs of weakness. These inventory builds have been a consistent theme over the last month.<\/p>\n
On the demand side, recent purchasing managers’ index (PMI) data from both Europe and China fell short of expectations, pointing to a slowdown in global manufacturing activity. This weakens the case for strong oil consumption heading into the winter. We are not seeing the robust demand recovery that many had anticipated earlier in 2025.<\/p>\n
Given this backdrop, traders should consider buying put options on December WTI or Brent contracts. This strategy provides downside protection and profits if prices continue to drift lower as supply outpaces weakening demand. It offers a defined-risk way to express a bearish view over the next several weeks.<\/p>\n
Another approach is to establish bear call spreads, selling a call option and simultaneously buying a further out-of-the-money call. This generates an initial credit and benefits from either a drop in oil prices or a sideways market with declining volatility. This is suitable for those expecting prices to stay capped below the $82-$84 range.<\/p>\n
We can look back to a similar period in late 2024 when gradual supply increases coincided with worries about economic growth, keeping a firm lid on prices. That historical pattern suggests the current environment is not supportive of a major price rally. The path of least resistance for oil appears to be sideways to down in the coming weeks.<\/p>\n
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