Insights 
VT 
WTI crude oil prices rose to around $60.80 on Wednesday, marking a 1.0% increase for the day. This was despite bearish supply signals, with traders awaiting the Energy Information Administration’s official report. The American Petroleum Institute reported a rise in US crude oil stocks by 6.5 million barrels for the week ending October 31. This follows a decrement of 4.0 million barrels in the prior week, showing a net gain of 3.6 million barrels for the year.
Geopolitical tensions in the Middle East and the Black Sea present a key source of support for the oil market. These include Ukraine’s intensified strikes on Russian energy infrastructure, targeting facilities such as Lukoil’s Norsi refinery. Such tensions could reignite supply concerns, sustaining WTI prices.
Potential Market Impact
In the short term, large stock builds in US crude could limit WTI’s recovery, while geopolitical tensions and resilient refined product demand counterbalance pressures. Technically, WTI trades within a range of $59.50 and $61.30, testing resistance near $61.00. A breakout could lead toward $62.50 and potentially $66.00, while support holds near $59.46 based on the 100-period Simple Moving Average.
The market is currently stuck in a tug-of-war, which we can see with WTI oil hovering near $61. The bearish pressure comes from rising US stockpiles, as the recent EIA report confirmed a significant build of 5.8 million barrels for the last week of October. This suggests that for now, supply is outpacing immediate demand in the United States.
On the other hand, a strong geopolitical risk premium is keeping prices from falling further. We are closely watching the continued Ukrainian strikes on Russian oil refineries, which threaten to remove a substantial volume of refined products from the global market. Any escalation in the Middle East or the Black Sea will add fuel to this fire, making traders hesitant to bet heavily against oil.
Strategies for Traders
This environment of conflicting signals points toward elevated volatility in the coming weeks. The CBOE Crude Oil Volatility Index (OVX) is trading near 45, well above its long-term average, indicating that the options market is pricing in the potential for sharp price swings. We remember how prices shot past $120 a barrel back in 2022 on geopolitical fears, a lesson that supply shocks can override inventory data almost instantly.
For derivative traders, this setup suggests strategies that can profit from a significant price move, regardless of the direction. Buying a straddle, which involves holding both a call and a put option with the same strike price and expiry, could be a prudent approach. This position will become profitable if oil breaks decisively out of its current $59.50 to $61.30 range before the options expire.
Alternatively, for those with a directional view, using spreads can help manage costs in this high-volatility market. A trader expecting geopolitical tensions to win out could consider a bull call spread, aiming for a move toward the $66 September high. Conversely, a bear put spread would be a defined-risk way to target the $56 level if inventory builds continue to weigh on the market.
We should also be looking ahead to the upcoming OPEC+ meeting scheduled for December 1, 2025. Given that current prices are near a level that has historically triggered conversations about production cuts, any commentary from key members could become a major catalyst. This makes longer-dated options for December or January valuable tools for positioning ahead of that key event.
