Insights 
VT 
WTI Oil price decreased early in the European session, trading at $60.89 per barrel, down from $61.37. Brent crude also declined, now at $64.68, in contrast to its previous close of $65.16.
WTI Oil, or West Texas Intermediate, is a premium type of crude due to its low gravity and sulphur content. Sourced in the US and distributed via the Cushing hub, it serves as a benchmark for the oil market.
Supply And Demand Factors
Supply and demand dynamics largely influence WTI Oil prices. Global growth, political instability, and OPEC’s decisions are notable factors. The US Dollar’s value also affects oil prices because oil is traded primarily in US Dollars.
Oil inventory reports from the American Petroleum Institute and the Energy Information Agency impact WTI Oil prices. A decrease in inventories indicates higher demand, potentially raising prices. In contrast, increased inventories suggest greater supply, which may lower prices. The EIA’s data is frequently deemed more reliable.
OPEC, comprised of 12 oil-producing countries, significantly affects WTI Oil prices through production quotas. If OPEC reduces quotas, prices may rise due to tightened supply. Conversely, increasing production can lower prices. OPEC+ includes additional nations, such as Russia, influencing market conditions further.
With WTI dropping below $61, we see this as confirmation of the bearish trend that has been developing. The immediate market sentiment is weak, suggesting that call options are looking less attractive. Traders may consider buying put options or establishing put spreads to capitalize on further downward movement.
Impact Of Dollar Strength
Last week’s Energy Information Administration (EIA) report showed an unexpected inventory build of 2.5 million barrels, which is continuing to pressure prices. This data, combined with recent reports of slowing manufacturing activity in Europe, suggests a weakening demand outlook. This contrasts sharply with the demand-driven price spikes we saw back in 2023.
Looking ahead, the market is focused on the upcoming OPEC+ meeting scheduled for the end of November. Given the current price levels, we anticipate discussions about extending or even deepening production cuts to support the market. However, any hesitation from key members could send prices tumbling further, creating an opportunity for those positioned for volatility.
The strength in the US Dollar is another major factor, with the Dollar Index (DXY) holding firm around the 106.5 level. A strong dollar makes oil more expensive for holders of other currencies, which tends to dampen global demand. As long as the Federal Reserve maintains its hawkish stance on interest rates, this headwind for crude oil is likely to persist.
Even the typical seasonal support from approaching winter seems muted this year. We are seeing forecasts for a milder-than-average winter in North America, which could reduce demand for heating oil. We recall the price action in the winter of 2024, where similar forecasts kept a lid on any significant rallies until much later in the season.
