West Texas Intermediate (WTI) crude oil edged higher, trading near $59.10, up nearly 1.00% despite a US Energy Information Administration (EIA) report indicating a 574K barrel rise in crude inventories, contrary to expectations of a 1.9 million-barrel decrease. Gasoline and distillate stocks also saw substantial increases, pointing to weaker demand.<\/p>\n
Geopolitical tensions stayed high as discussions between the US and Russia failed to progress regarding Ukraine, influencing the market outlook alongside concerns over global oversupply. Technically, WTI is constrained by a descending trendline and the 21-day Simple Moving Average, which acts as immediate resistance around $59.50.<\/p>\n
A breakthrough above this area is needed to challenge the next resistance between the $60.50-$62.00 region, underpinned by the 100-day SMA. On the downside, initial support is observed near $58.00, with the November lows around $57.00 offering further support.<\/p>\n
Momentum indicators show a mixed picture. The Moving Average Convergence Divergence (MACD) is slightly above the signal line, pointing to decreasing bearish momentum. The Relative Strength Index (RSI) is neutral around 48, while the Average Directional Index (ADX) at 12.7 reflects the absence of a strong trend.<\/p>\n
We are seeing West Texas Intermediate crude holding near $59 a barrel, but the underlying data suggests weakness. The latest EIA report, showing an unexpected inventory build of 574K barrels, has been followed by another report this past week confirming a further build of 1.1 million barrels. This trend points to weakening US demand as we head deeper into the winter season.<\/p>\n
The broader global economic picture reinforces this cautious view for the coming weeks. Weaker-than-expected US jobs data for November 2025 has been compounded by China\u2019s latest Caixin Manufacturing PMI, which registered at 49.5, indicating a contraction in factory activity. These data points suggest a continued slowdown in fuel consumption from the world\u2019s two largest economies.<\/p>\n
On the supply side, the early December OPEC+ meeting concluded with members extending their voluntary production cuts, but the market’s reaction has been muted. We saw a similar dynamic back in late 2023, when doubts over compliance with voluntary cuts capped any significant price rally. This historical precedent suggests traders are hesitant to price in a tighter supply scenario until they see concrete evidence of reduced output.<\/p>\n
For derivative traders, this environment suggests selling call options or establishing call credit spreads with strike prices above the formidable $60.50 to $62.00 resistance area. This strategy would capitalize on the expectation that the descending trendline and weak fundamentals will keep prices contained. The low Average Directional Index (ADX) reading of 12.7 also signals a lack of a strong trend, favoring range-bound strategies.<\/p>\n
Conversely, with prices hovering just above key support levels, purchasing put options with strike prices at or below the $58.00 mark offers a defined-risk way to profit from a potential break lower. A decisive move below the November 2025 lows around $57.00 could trigger a new wave of selling. Given the mixed momentum indicators, traders should remain nimble, as a short squeeze is possible if geopolitical tensions surrounding Ukraine escalate unexpectedly.<\/p>\n
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