Oil prices have risen unexpectedly, with a 6.5% increase over the week, catching many by surprise. This comes despite the Organisation of the Petroleum Exporting Countries (OPEC) adding more barrels, with Saudi Arabia reportedly planning to increase by 411,000 barrels per day in the coming months.

A potential inverted head-and-shoulders pattern suggests a possible breakout, with a key resistance level at $65. Market charts indicate a possible quick squeeze up to $70-71, driven by short market positioning.

Signs Of Market Optimism

Time spreads appear surprisingly bullish, with trade optimism influencing the outlook. Potential trade agreements with low tariffs could relieve risk assets, including oil.

Recently, West Texas Intermediate (WTI) crude oil rose by $1.34 to $64.72, marking a session high. Contributing to market sentiment, the Baker Hughes US oil rig count decreased by nine, now totalling 442, indicating a rapid decline.

Such a steep rise in oil prices amidst increased supply from OPEC—particularly the forthcoming boost from the Saudis—strikes an unusual tone in what many had assumed was a more stabilised market trajectory. The current reaction reflects not just a shift in trader sentiment but also how deeply embedded anticipation and market positioning are in setting short-term directions.

Reading into the bullish time spreads, traders appear to be pricing in stronger demand or, at the very least, a tightening supply in the near-term delivery windows. That’s especially telling given that the increase in output isn’t yet physically material on the global stage. What matters more at present is how the futures market responds to forward-looking expectations, rather than actual barrels hitting the ground.

Market Positioning And Sentiment

The development of a potential inverted head-and-shoulders pattern, typically read as an indicator of a broader trend reversal, is notable. With resistance forming around the $65 mark and signs of short covering progressing quickly, it would not be entirely misguided to expect that momentum could drive it as high as $70.71—especially if liquidity and follow-through confirm the technical breakout. Tight positioning in the derivatives space now leaves the market vulnerable to forced upward moves.

The dip in the Baker Hughes rig count adds another layer to this. A reduction of nine in just a week suggests producers may be pulling back, intentionally or otherwise, on new drilling activity. When we have production increasing from one part of the world while another scales back, it creates pockets of perceived scarcity that traders latch onto. While that alone doesn’t set the direction, it feeds into the broader tone of supply uncertainty. That matters in a tightly wound market like this, where sentiment drives a lot of the volatility.

We’re also seeing trade policy optimism buoy riskier assets. Some of these headlines around potential tariff reductions and agreements have worked their way into price expectations well before any official confirmation. If expectations around simplified trade routes or lower cross-border duties continue to build, short-duration contracts will likely reflect it first before any long-term changes in production or consumption patterns.

It’s also important to note that options activity has begun skewing toward higher strike prices, which often signals that larger holders are hedging against rapid upside rather than protecting against collapse. That subtle shift indicates the balance of fear has moved, even if only temporarily.

In markets like this, where price reacts faster than fundamentals can prove or disprove the prevailing narrative, action often takes precedence over waiting. Speed is rewarded; hesitation invites risk. We don’t assume these price levels will stick without challenge, but current momentum shouldn’t be ignored either.

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