WTI traded in choppy fashion on Wednesday, hovering near its highest level since 24 July as Middle East tensions kept the risk premium in place. The contract was around $89.70 a barrel after touching $90.78. Iran\u2019s Islamic Revolutionary Guard Corps said two oil tankers hit naval mines while attempting to transit the waterway, leaving the vessels disabled and crews forced to disembark after ignoring warnings.<\/p>\n
Prices also took support from US inventory data. The EIA reported crude stocks fell by 4.45 million barrels versus expectations for a 1.1-million-barrel draw, reversing the prior week\u2019s 95,000-barrel increase. Regional export flow estimates pointed to improving supply: Goldman Sachs put flows at roughly two-thirds of their pre-war 20 million barrels per day, while the US Energy Secretary cited average throughput of 8 million barrels a day via the Strait of Hormuz, with another 4 to 5 million routed through pipelines. Attention turns to an OPEC+ meeting on Sunday, with reports indicating October policy may be unchanged, while charts show resistance at $90-$92, RSI near 64, MACD positive, and ADX near 16.<\/p>\n
We advise derivative traders to adopt a cautious, range-bound strategy as West Texas Intermediate (WTI) hovers near its six-week high of $89.70. While geopolitical tensions in the Middle East have pushed prices up, strong technical resistance between $90 and $92 suggests immediate gains will be capped. Given that the Average Directional Index (ADX) sits at a weak 16, we should avoid buying into the rally and instead prepare for consolidation.<\/p>\n
We must closely monitor easing supply pressures, as reports show Persian Gulf oil exports have recovered to about 13.3 million barrels per day, or two-thirds of their pre-war levels. Furthermore, with 8 million barrels per day still transiting the Strait of Hormuz and up to 5 million bypassing it through pipelines, the threat of an immediate global supply crunch is shrinking. Traders can exploit this limited upside by selling out-of-the-money call options above the $92 resistance level. <\/p>\n
On the downside, we expect solid support near the 100-day moving average of $85, especially after the latest US commercial crude inventories fell by a massive 4.45 million barrels. This drop far exceeded the market’s expected 1.1 million barrel draw, proving that physical demand remains highly resilient. With OPEC+ widely expected to hold its production targets steady at Sunday’s meeting, we recommend utilizing credit spreads to capture premium near this $85 floor.<\/p>\n
Because geopolitical uncertainty keeps implied volatility elevated, option premiums are currently pricing in a significant risk premium. We suggest implementing neutral strategies, such as iron condors, focused on the $85 to $92 range to benefit from rapid time decay. This positioning allows us to collect premium from the market’s current choppy, sideways behavior while keeping defined risk limits in place.<\/p>\n\n\n\n