The price of crude oil settled at $62.26, marking an increase of $0.39 or 0.63%. While higher on the day, it remains below peak levels. The recent decision by OPEC+ to boost output by 137,000 barrels per day in October was already anticipated after last week’s decline. This modest increase signals a commitment to stabilising prices.
Economists suggest that this cautious strategy reduces concerns about oversupply. Meanwhile, geopolitical tensions, including the Russia-Ukraine conflict and the potential for new U.S. sanctions, continue to bolster the market. The price reached a high of $63.34 before declining, nearing the earlier low of $61.85.
Crucial Market Dynamics
On the previous Friday, prices dipped to $61.45, matching a low from August 18. For sellers to gain more influence, breaking below this double bottom is essential. The daily chart indicates a risk of prices moving above the 100-day moving average, currently at $64.28. As long as prices remain under this threshold, sellers maintain greater control over the market.
With crude oil prices failing to hold their recent highs, we see a market caught between competing forces. The decision by OPEC+ to implement a very modest production increase signals a clear intention to support prices above the $60 level. This fundamental support is being tested by technical weakness, as the price remains below key moving averages.
Adding to the pressure on prices, the most recent EIA report from last week showed a surprise build in U.S. crude inventories of 1.9 million barrels, countering expectations of a seasonal draw. This suggests that near-term supply may be more than adequate to meet current demand. This data point helps explain why the price rally above $63 yesterday was so short-lived.
Strategic Trading Levels
On the demand side, recent manufacturing PMI data from China for August 2025 came in at 49.7, marking the second consecutive month of contraction. This weakness from the world’s largest oil importer is a significant headwind for the market. We also saw this sluggishness reflected in the summer of 2024 when similar demand fears capped oil prices below $80 per barrel despite ongoing geopolitical tensions.
From a derivatives standpoint, the critical level to watch is the double bottom at $61.45. A decisive break below this support could trigger further selling, making put options or put spreads with strike prices around $60 and $58 an attractive strategy for the coming weeks. Traders should watch for an increase in volume on a move below this level to confirm the breakdown.
Conversely, the upside appears capped by the 100-day moving average, currently near $64.28. For traders anticipating that geopolitical risks will eventually outweigh weak economic data, call options or bull call spreads could be considered, but only on a sustained close above this resistance level. Until then, sellers appear to have the advantage in this range.
