Insights 
VT 
West Texas Intermediate (WTI) Oil remains subdued at around $60.00 per barrel, as oversupply concerns loom ahead of the upcoming OPEC+ meeting. There are reports that eight OPEC+ members plan to increase production by 137,000 barrels per day in December.
Saudi Arabia’s crude exports hit a six-month high of 6.41 million barrels per day in August, with further increases expected. The Energy Information Administration reported a record US output of 13.6 million barrels per day last week, further contributing to oversupply concerns.
Impact Of Sanctions On Russian Oil
This situation offsets recent US sanctions on Russian Oil producers, as major importers like India resume purchases. Indian Oil Corp has acquired five cargoes of Russian Oil for December from non-sanctioned suppliers.
US President Donald Trump announced Chinese commitments to import US energy, including oil and gas from Alaska, though analysts doubt its potential impact on demand. Factors influencing WTI Oil prices include global demand, political instability, and OPEC decisions.
OPEC, a group of major oil-producing countries, plays a key role in setting production quotas, impacting WTI Oil prices significantly. US Dollar fluctuations also affect oil prices, given that transactions are made in USD.
With West Texas Intermediate crude oil holding around the $60 mark, we see a market dominated by oversupply. The primary pressures come from OPEC+ members signalling production increases, Saudi Arabia’s exports reaching highs, and record-breaking US output. This glut of oil is effectively capping any significant upward price movement for now.
The latest Energy Information Administration report from this week adds to these concerns, showing US production remains robust at 13.5 million barrels per day. Furthermore, we saw a surprise inventory build of 2.1 million barrels, directly contradicting forecasts for a slight draw. This indicates that supply is outpacing current demand, reinforcing the bearish sentiment.
Looking ahead to the upcoming OPEC+ meeting in late November, the plan to increase production by 137,000 barrels per day in December is already being priced in. This strategy to reclaim market share suggests the group is more focused on volume than on defending a higher price floor. Consequently, any rallies in the coming weeks will likely be seen as selling opportunities.
Implications For Traders
On the demand side, recent manufacturing PMI data from both China and the Eurozone came in slightly below expectations, hinting at a potential softening of global economic activity. This lackluster demand picture provides little support for oil prices in the face of swelling supply. The much-discussed US-China energy deal remains a point of skepticism and is not expected to materially boost demand in the short term.
We are also seeing that US sanctions on Russian producers are having a limited impact on global supply. The continuous flow of Russian oil to major buyers like India, via non-sanctioned suppliers, means these barrels are still reaching the market. This resilience effectively neutralizes a key potential bullish factor for crude prices.
For derivative traders, this environment suggests that strategies profiting from range-bound or declining prices could be favorable. Selling call spreads above recent highs, such as the $65 level, could be a way to capitalize on the strong resistance created by the supply overhang. We believe volatility may remain suppressed, making options selling strategies more attractive than outright directional bets on a price recovery.
This situation feels reminiscent of the market we saw in late 2023, when fears of a global slowdown coincided with strong non-OPEC production growth, keeping a lid on prices. Unlike the supply-shock-driven volatility of 2022, the current market dynamic is defined by abundant supply. Traders should be cautious about positioning for a sustained rally until we see a significant shift in either OPEC+ policy or a major uptick in global demand indicators.
