US crude oil inventories increased by 3.036 million barrels, despite expectations for a decrease of 0.275 million barrels. Distillate inventories rose by 0.714 million barrels, which is a bit lower than the expected gain of 0.725 million barrels. Gasoline inventories dropped by 0.792 million barrels, while a smaller decrease of 0.693 million barrels was anticipated. Cushing inventories saw a slight increase of 0.045 million barrels compared to the previous week.

Current Crude Oil Price Overview

Crude oil is currently trading down about $0.23 at $62.90. Its price trend remains downward, staying below the 100-day moving average of $64.77. The unexpected rise in crude oil inventories signals a bearish outlook for the market. Instead of a decrease, we saw a build of more than 3 million barrels, indicating weaker demand as summer comes to an end. This report supports the trend we’ve been noticing, as recent global manufacturing data has not been strong, especially in Europe. U.S. crude production is steady at around 13.4 million barrels per day, which puts additional pressure on supply. The small drop in gasoline inventories isn’t enough to counter the negative crude oil data. With prices below the 100-day moving average of $64.77, this level now acts as a barrier. The combination of this technical weakness and poor fundamental data suggests a bearish outlook for the next few weeks. We see any upticks toward this resistance as chances to take bearish positions.

Trading Strategy Considerations

For derivative traders, this market favors strategies that profit from declining or stable prices. There is growing interest in September put options with strike prices around $60 and $58. This allows traders to bet on further declines while keeping risk defined. Another strategy we are exploring is the bear call spread. By selling a call option near the current price and purchasing a higher-strike call for protection, traders can earn a premium. This approach is profitable if crude oil prices move down, remain flat, or rise slightly. We recall the market behavior from autumn 2024, when unexpected inventory builds led to a sharp drop in the fourth quarter. While every market is different, this historical trend suggests caution is advised. Currently, the market seems oversupplied, and it will take a major event to change that perspective. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now