Crude oil prices have increased today but remain unable to fully recover from last week’s decline, initiated by rumours of an OPEC+ production rise. The rumours are confirmed, with 137,000 barrels per day set to enter the market next month.
The output increase pace may persist until voluntary cuts are completely reversed or possibly surpassed. The recent crude price chart shows a precarious situation, as support at $60 may need testing, risking a return to previous lows if it fails.
Oil Market Overview
Currently, oil’s resilience is notable, yet discussions on Chinese stockpiling suggest it is not a long-term solution, potentially leading to a severe market downturn. However, lower oil prices might offer opportunities, as $55 per barrel is deemed unsustainable.
Exploration spending is currently at about $10 billion globally annually and could decrease further. Additionally, US shale operations face dwindling Tier 1 inventory and decreasing drilling activity. A period of undersupply might occur in late 2026 or 2027 when OPEC has little to no spare capacity available, marking a pivotal moment for the market.
We’re facing a market where more supply is a confirmed reality, not just a rumor. The OPEC+ decision to add 137,000 barrels per day next month is weighing on prices that failed to recover from last week’s losses. This sets up a bearish outlook for the immediate future.
The price chart for crude oil is in a fragile position after breaking its recent support level. We need to watch the $60 per barrel mark closely, as a break below that could trigger a much faster sell-off. This kind of sharp move would feel a lot like the “Liberation Day” plunge we saw in bond yields earlier in 2025.
A key support for prices has been strong demand, partly from Chinese stockpiling, but that may be ending. Recent customs data showed China’s crude imports for August 2025 actually ticked down 2% to 10.8 million bpd. This suggests their strategic buying is slowing, removing a major pillar of support for the market.
Preparing for Future Market Trends
For the next few weeks, the path of least resistance appears to be lower, making bearish positions attractive. Traders could consider buying put options with strike prices at or below $60 to profit from a potential breakdown. Selling call spreads would be another way to express this view while defining risk.
However, we must remember that prices around $55 are not sustainable in the long run. The latest EIA report from early September 2025 showed new-well productivity in the Permian Basin has fallen for the fifth straight month. This depletion of top-tier US shale inventory is a critical setup for a future supply crunch.
This means that while the immediate trade is bearish, we should be preparing for a major reversal in 2026 or 2027. Astute traders might use any significant price drops in the coming weeks to begin slowly accumulating long-dated call options. These could be very cheap if the market panics to the downside but offer huge upside when the supply deficit finally bites.
