Insights 
VT 
WTI crude oil prices saw a decline to around $61.15 in the Asian trading session, attributed to expectations of OPEC+ increasing oil output in December. The proposal by OPEC+ involves a production hike of an additional 137,000 barrels per day, amidst no consensus on further expansion rates.
Potential Support for Oil Prices
Potential support for oil prices comes from a possible US-China trade deal, which could remove looming tariffs on Chinese imports. Positive talks between US President Trump and China’s President Xi Jinping were slated at an Asian summit, which might enhance oil-demand sentiment.
Additionally, renewed US sanctions against Russia may also bolster oil prices. Sanctions imposed on major Russian oil producers like Rosneft and Lukoil relate to Russia’s stance on the Ukraine peace process.
West Texas Intermediate (WTI) oil, traded on global markets, is valued for its low sulfur content and ease of refinement. WTI prices rely heavily on supply and demand, with OPEC playing a significant role in influencing these prices through production decisions.
Weekly oil inventory reports by the American Petroleum Institute (API) and Energy Information Agency (EIA) also impact WTI prices. Data showing inventory changes can indicate shifts in supply or demand, affecting prices accordingly.
Volatility in Oil Markets
We are seeing West Texas Intermediate trade near $85 a barrel, a very different environment from the $61 level we saw years ago when OPEC+ was steadily increasing production. The main focus now is the upcoming OPEC+ meeting, where discussions are centered on potential production *cuts* to support prices amid signs of a slowing global economy. This creates a tense backdrop for traders, as the cartel’s decision will set the tone for the market into the new year.
Bearish sentiment is growing due to weakening demand, especially from China, where recent September 2025 data revealed a 5% year-over-year decline in crude imports. This trend confirms fears about their sputtering economic recovery and is leading many traders to anticipate lower oil prices. Derivative markets are showing an increase in put options being bought as a hedge against a potential slide below $80.
However, the supply picture in the United States is telling a different story, creating a conflict for traders. Last week’s Energy Information Administration (EIA) report showed a surprise inventory drawdown of 2.5 million barrels, against expectations of a small build. This suggests the physical market remains tight and is providing a floor for prices, preventing a steeper decline for now.
Looking back, the US sanctions on Russian oil companies that were a major headline years ago are now a structural feature of the market. While they continue to impact official supply chains, their effectiveness has been partially mitigated by the rerouting of flows to Asia. The key factor for traders is not the sanctions themselves, but the actual volume of oil being removed from the global balance.
Given these opposing forces of weak demand forecasts and tight current supply, we expect high volatility in the weeks ahead. Derivative traders should consider strategies that profit from large price swings, such as straddles or strangles, ahead of the OPEC+ decision. This approach allows a trader to capitalize on a significant market move without needing to predict the specific direction of the breakout.
