Insights 
VT 
West Texas Intermediate (WTI) US Oil sees a decline of 2.55%, trading around $59.80. This comes as OPEC+ announces plans to raise production by 137,000 barrels per day starting in December. The group’s increased output target could lead to potential oversupply, putting downward pressure on prices.
US sanctions against Russia’s major oil producers, Rosneft and Lukoil, might support prices by potentially tightening global supply. Sanctions include freezing assets and banning transactions with US entities. Meanwhile, optimism about US-China trade talks offers some support, amidst plans to lift 100% tariffs on Chinese imports.
API Report and Market Reaction
Attention now turns to the upcoming American Petroleum Institute (API) report on oil inventories. A larger-than-expected inventory build could add more pressure to WTI prices.
The technical outlook shows WTI finding support near $59.50 but indicates ongoing risks. Support comes from the 100-period Simple Moving Average (SMA) at $59.56, with potential for further decline if broken. Resistance is noted at $61.00 and $62.38. The Relative Strength Index (RSI) below 50 suggests continued downside potential in the short term.
The drop in WTI oil to around $59.80 presents a clear conflict for traders. The primary downward pressure comes from the OPEC+ plan to increase production, which signals a potential supply surplus heading into the winter. We must consider this the market’s immediate focus.
This OPEC+ decision to add 137,000 barrels per day marks a shift from the production cuts we saw through much of 2023 and 2024. The latest Energy Information Administration (EIA) weekly report, released just last week on October 22, 2025, showed a surprise build in U.S. crude inventories of 1.2 million barrels, adding to oversupply fears. An additional production hike from OPEC+ could easily push prices toward the technical support level near $56.
Counteracting Forces and Volatility
However, we see significant counteracting forces that could support prices. The new U.S. sanctions on Russia’s main oil producers could tighten global supply more than the market currently expects. Looking back at the sanctions response in 2022, the initial shock caused a major price spike before Russia eventually rerouted its exports, suggesting we could see short-term upside.
On the demand side, optimism around the upcoming U.S.-China trade talks is providing a floor for prices. Recent data supports this, as China’s Caixin Manufacturing PMI for September 2025 registered at 50.8, showing modest expansion and suggesting underlying economic strength. A positive outcome from this week’s summit could quickly erase the recent losses.
Given these opposing forces, we believe implied volatility is likely to rise, making options strategies attractive. A long straddle, buying both a call and a put option with the same strike price and expiration, could be an effective way to trade the expected price swing without betting on a specific direction. The key trigger will be whether WTI breaks its technical support around $59.50 following the next API inventory report.
