WTI Crude Oil has dropped below $60, reaching a five-month low as geopolitical risk eases due to the Gaza peace deal. The US benchmark experienced a decline for the second consecutive week, trading around $59.80, after dipping to $59.21, marking a loss of over 2% in a day.

This decrease comes as Israel and Hamas have agreed on the initial phase of the peace plan. From a technical perspective, WTI remains bearish, trading below key moving averages clustered in the $62.50-$64.50 zone. The Relative Strength Index (RSI) stands near 35, suggesting bearish momentum.

Immediate Support and Resistance Levels

Immediate support is at $59.50, with a break below potentially targeting $57.47, and this year’s low around $55.00. Resistance sits at $60.00, offering a potential corrective path to $61.50, though recoveries may be hindered unless prices surpass mid-$62. The broader setup favours further price declines with repeated lower highs.

WTI Oil, a type of high-quality crude oil, is influenced primarily by supply and demand, political situations, and OPEC decisions. Inventory reports by API and EIA can also affect oil prices with changes indicating supply-demand fluctuations. WTI Oil is traded in US Dollars, and the currency’s value can influence its cost.

With WTI crude oil breaking below the psychological $60 mark, we see this as a clear signal of continued bearish momentum. The easing of geopolitical risk from the Gaza peace deal has removed a major pillar of price support. The market’s focus is now shifting back to fundamental supply and demand, which appears weak.

This view is strengthened by recent data showing weaker global demand and ample supply. The latest Energy Information Administration (EIA) report published on Wednesday, October 8, 2025, showed a surprise crude inventory build of 2.1 million barrels, against expectations of a minor draw. Furthermore, China’s Caixin Manufacturing PMI for September came in at 49.5, indicating a contraction in factory activity and suggesting lower future oil consumption from the world’s largest importer.

Derivative Trading Strategies

From a technical perspective, the path of least resistance is downwards. Prices are trading firmly below the key moving averages clustered around the $62.50-$64.50 area, which now acts as a heavy ceiling. The Relative Strength Index (RSI) sitting near 35 suggests there is still room for prices to fall before becoming technically oversold.

For derivative traders, this environment favors strategies that profit from falling prices. We believe buying put options with strike prices near $57.50 or $55.00 could be a direct way to capitalize on a continued slide toward those support levels. Shorting WTI futures contracts is another direct approach, though it carries higher risk if the market suddenly reverses.

For a more risk-defined strategy, traders might consider a bear put spread. This involves buying a put option at a higher strike price and selling another at a lower strike price to lower the upfront cost and cap potential losses. Selling out-of-the-money call options or implementing bear call spreads with a ceiling around the $62.50 resistance zone could also be effective for generating income while betting that prices will not recover in the near term.

Looking back, we remember the sustained period of prices above $80 through much of 2024, driven by supply concerns and stubborn inflation. The current break below $60 represents a significant shift in market structure. Unless there is a surprise production cut from OPEC+ or a new geopolitical flare-up, we anticipate sellers will remain in control for the coming weeks.

Create your live VT Markets account and start trading now.