WTI crude oil prices dropped to about $61.15 during the Asian trading session. This decline is due to expectations that OPEC+ will increase oil output in December. They are proposing to raise production by an additional 137,000 barrels per day, but there is no agreement on how much to expand in the future.

Support for Oil Prices

Oil prices may receive support from a possible trade deal between the US and China. If tariffs on Chinese imports are lifted, that could boost demand for oil. Positive discussions between US President Trump and China’s President Xi Jinping are set to take place at an upcoming Asian summit, which could further improve oil demand. Additionally, renewed US sanctions against Russia could increase oil prices. These sanctions target major Russian oil companies like Rosneft and Lukoil due to Russia’s involvement in the Ukraine conflict. West Texas Intermediate (WTI) oil, which trades globally, is valued for its low sulfur content and ease of refinement. Prices highly depend on supply and demand, with OPEC significantly influencing them through production choices. Weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) also affect WTI prices. Changes in inventory data can signal shifts in supply or demand and influence prices.

Volatility in Oil Markets

Currently, West Texas Intermediate is trading around $85 a barrel, a stark contrast to the $61 level from years ago when OPEC+ was consistently increasing production. The focus now is on the upcoming OPEC+ meeting where they may discuss production cuts to support prices amid signs of a slowing global economy. This creates uncertainty for traders, as the decisions made will impact the market into the new year. Bearish sentiment is growing due to weaker demand, particularly from China. Recent data from September 2025 showed a 5% year-over-year drop in crude imports, raising concerns about China’s economic recovery and prompting traders to expect lower oil prices. Many are buying put options to hedge against the possibility of prices falling below $80. However, the supply situation in the United States tells a different story, creating a conflict for traders. Last week’s EIA report showed an unexpected inventory drop of 2.5 million barrels, contrary to expectations of an increase. This indicates that the physical market remains tight, providing some support for prices and preventing a sharper decline for now. Looking back, the US sanctions on Russian oil companies were a major topic in the past, but they have become a regular part of the market’s structure. While these sanctions still affect official supply chains, their impact has been lessened due to rerouted oil flows to Asia. The focus for traders is not on the sanctions themselves, but on how much oil is actually being taken off the global market. With weak demand forecasts and tight current supply, we expect high volatility in the coming weeks. Derivative traders should consider strategies that benefit from large price fluctuations, such as straddles or strangles, in anticipation of the OPEC+ decision. This strategy allows traders to profit from significant market moves without needing to guess the direction of the change. Create your live VT Markets account and start trading now.

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