West Texas Intermediate (WTI) Oil rose by about 2.5%, trading close to $59.40, after previously dropping more than 5.0%. This rebound came after US President Trump assured that China’s economy “will be fine” and expressed his wish to “help China, not hurt it,” amidst ongoing trade tensions. Trump also addressed the Gaza conflict, which helped ease concerns about oil supply. He mentioned on Sunday that a meeting with China’s President Xi Jinping was unnecessary, even with the looming threat of 100% tariffs. In response, China hinted at possible retaliation against these tariff threats.

China’s Crude Oil Import Increase

In September, China’s crude oil imports climbed by 3.9% to 47.25 million metric tons, or about 11.5 million barrels per day. This increase was due to refineries running at maximum capacity. WTI Oil, sourced from the US, is appreciated for its low gravity and low sulfur content, making it high-quality and easy to refine. It is delivered through the Cushing hub and is a key benchmark in the oil market. Several factors affect WTI oil prices, including supply and demand, global growth, political instability, and currency values. Decisions made by OPEC can also have a major impact on prices, along with inventory data from API and EIA.

Market Volatility and Geopolitical Factors

Oil prices are trying to stabilize around $59.50 after recent ups and downs. The market is influenced by President Trump’s comforting remarks about China and reduced supply concerns from the Middle East. This creates a challenging situation, with high headline risks. The geopolitical situation remains a significant source of uncertainty for traders in the coming weeks. Although Trump’s comments on the Gaza conflict have reduced some risks, minor ceasefire violations indicate that tensions could flare up again. Most eyes are on the upcoming G20 summit next month, where the chances of a substantial meeting between Trump and President Xi are low, keeping trade-related volatility alive. Demand signals present a mixed picture that requires caution. While September’s Chinese crude import data was strong, the Caixin Manufacturing PMI from October 1st showed a slight decline to 49.8, which was below expectations. This contrasts with a robust U.S. non-farm payrolls report from early October, suggesting stronger demand in the U.S. compared to Asia. On the supply side, the latest Energy Information Administration (EIA) report from October 8 revealed an unexpected inventory increase of 2.1 million barrels, which is currently affecting prices. Traders should keep an eye on this week’s API and EIA reports; another increase might indicate weakened U.S. demand and could push WTI back toward the mid-$50s. Historically, two large inventory increases in October can signal a period of price decline heading into November. OPEC+ actions are expected to support prices from dropping significantly. Recent statements from key members reaffirm their commitment to maintaining current production levels through the year, aiming for market stability. Therefore, while demand concerns may limit price gains, OPEC+ is unlikely to let prices fall drastically. Given these mixed influences, we expect WTI to trade within a range of $57 to $62 for the coming weeks. Traders using derivatives might consider strategies that benefit from the current volatility and uncertainty, such as selling strangles or straddles with near-term expirations. Those looking for specific market direction should use options to limit risk until a clearer trend emerges from the U.S.-China trade situation or upcoming inventory data. Create your live VT Markets account and start trading now.

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