US crude oil prices have settled at $63.25, down by $1.55 or 2.39%. Donald Trump expressed expectations for crude oil to trade below $60. Reducing oil prices is one of his priorities.
Trump also opposes alternative energy sources like solar and wind-farms. He noted an increase in domestic oil production by 300,000 barrels per day.
Low Price Testing Moving Averages
Today, the low price hit $63.13, testing the 200-hour moving average of $63.15. Earlier, it fell below the 100-hour moving average at $63.62, which could indicate a further downward trend. Traders now look towards the recent low of $61.45.
With US crude oil now trading around $85 a barrel, the current political environment feels very familiar. We remember the focus on getting prices down back when oil was in the low $60s. That same pressure to lower gasoline prices for consumers is a major factor for traders to watch today.
Domestic production continues to be a key weapon in that fight, now sitting at a record high of nearly 13.5 million barrels per day. This is a significant increase from the levels we saw years ago and creates a powerful headwind against efforts by OPEC+ to keep prices elevated through their own production cuts. The persistent strength of the US shale industry provides a steady supply that weighs on global prices.
Technical Indicators And Market Sentiment
From a technical standpoint, the price action is showing signs of weakness after failing to hold above the $88 level last month. The price is currently testing its 50-day moving average, a critical support level watched by many. A decisive break below this could signal a move back toward the summer lows near $80.
For derivative traders, this conflict between high domestic supply and geopolitical tensions suggests volatility will remain high. The CBOE Crude Oil Volatility Index (OVX) has been climbing, reflecting market uncertainty. This makes strategies like buying straddles or strangles attractive, as they can profit from a large price move in either direction.
We are also seeing a notable increase in bearish sentiment in the options market. The volume of put options, which bet on a price decrease, has been outpacing call options by nearly 2-to-1 over the last two weeks. This indicates that many traders are positioning for a potential drop, possibly back towards the $75 range seen earlier this year.
