Insights 
VT 
West Texas Intermediate (WTI), the US crude oil benchmark, is trading near $60.15 during early Asian trading on Wednesday. This decline comes amid potential plans by OPEC+ to increase oil production. Reports suggest a modest production increase in December, with targets rising by 137,000 barrels per day.
Data from the American Petroleum Institute indicates US crude inventories fell by 4 million barrels last week. This compares to a decline of 2.98 million barrels the week prior. Crude inventories in the US have seen a net loss of 6.4 million barrels for the year. Traders will be watching the Energy Information Administration’s report later on Wednesday.
The Impact of Federal Reserve Decisions
The Federal Reserve’s interest rate decision is also pivotal, as a 25 basis point cut could affect the US Dollar’s strength. A weaker US Dollar usually makes oil cheaper for foreign buyers. This can lift demand and subsequently affect WTI prices.
West Texas Intermediate is a type of crude oil highly regarded for its low sulfur content, making it easily refined. Oil price is driven by factors such as supply and demand, global growth, political instability, and OPEC decisions. Inventory data from the API and EIA also impacts WTI prices by reflecting supply and demand changes.
With WTI crude oil hovering just above the critical $60 mark, we see a market pulled in two directions. The immediate pressure is downward due to OPEC+ signaling a potential supply increase for December. This suggests that call options with near-term expiry dates are looking less attractive, as the supply news could cap any rallies.
This planned production increase of 137,000 barrels per day is quite modest when we consider the larger context. We remember the significant voluntary cuts of over 2 million barrels per day that OPEC+ members put in place back in late 2023 to stabilize prices, so this small addition might not dramatically shift the supply balance. Traders should watch the upcoming OPEC+ meeting closely, as a surprise larger increase could justify buying puts or establishing bearish put spreads.
Conflicting Market Signals
On the other hand, demand signals from the United States remain strong, creating a solid floor under the price. The American Petroleum Institute reported a 4 million barrel draw, and the official EIA data released today confirmed a similar draw of 3.8 million barrels. With US commercial crude inventories still 4% below the five-year average for this time of year, any price dips could be seen as buying opportunities for those trading futures contracts.
Adding a bullish element is the Federal Reserve’s expected interest rate cut to the 3.75%-4.00% range later today. This continues the monetary easing cycle we’ve seen throughout 2025, which has helped soften the US Dollar from the highs we saw a couple of years ago. A weaker dollar typically supports oil prices, potentially offsetting the bearish sentiment from the OPEC+ news.
These conflicting signals are creating significant uncertainty, which often leads to higher implied volatility in the options market. This environment suggests strategies that benefit from sharp price movements, such as long straddles or strangles, could be considered ahead of the OPEC+ decision. Alternatively, if we believe these factors will keep prices range-bound between roughly $58 and $65, selling premium through iron condors could be a viable strategy.
