Insights 
VT 
West Texas Intermediate (WTI) crude oil trades near $61.70 during Thursday’s Asian session. The drop occurs as US crude inventories rose by 3.715 million barrels last week, surpassing analyst expectations of a 2.25 million-barrel increase.
The WTI price gains a degree of support from OPEC+ agreeing on a smaller-than-anticipated production increase of 137,000 barrels per day for November. Geopolitical tensions in Ukraine may result in extra sanctions on Russian exports, impacting WTI prices further.
Understanding WTI Oil
WTI Oil is a “light” and “sweet” crude, sourced in the US and distributed via the Cushing hub. Supply, demand, political instability, and the US Dollar’s value drive WTI Oil prices.
Weekly inventory data from the EIA and API influences WTI prices, reflecting supply and demand changes. EIA data, released every Wednesday, is seen as more reliable than API’s Tuesday reports.
OPEC’s production quotas are influential in determining WTI prices. Reductions can boost prices, whereas increased quotas may lower them. OPEC+ includes Russia and other non-OPEC members, expanding its influence on global oil prices.
The large and unexpected rise in US crude inventories is creating immediate downward pressure on WTI prices. This build of 3.715 million barrels is well above the five-year average for early October, signaling that demand may be softening more than we anticipated as we move out of the summer season. Traders should consider this a strong bearish signal, potentially making strategies like selling front-month call options attractive to capitalize on near-term price weakness.
Market Factors and Strategies
However, we see significant factors that could provide a floor for prices and even reverse this decline. OPEC+ has once again shown its commitment to price stability over volume by announcing a very modest production increase, a strategy they have maintained throughout 2024 and 2025. Geopolitical risks also remain elevated, and we only have to look back to the price spikes seen in 2022 after the initial invasion of Ukraine to understand how quickly sanctions can remove supply from the market.
The most immediate catalyst for volatility will be the upcoming speech by Federal Reserve Chair Jerome Powell. With the latest US inflation data from September showing an annual rate still at 2.7%, any hint of a more hawkish monetary policy could strengthen the US Dollar and push oil prices lower. Consequently, derivative traders should anticipate a spike in volatility, making options strategies like straddles or strangles viable to profit from a sharp price move in either direction.
For the coming weeks, we are likely caught between these conflicting signals of weak US demand and tight global supply. This suggests a potential range-bound market, with the low $60s acting as a key support level. An iron condor strategy could be effective for traders who believe the price will remain between major support and resistance levels until either the Fed provides a clear direction or a new supply-side event occurs.
