West Texas Intermediate (WTI) US Oil has dropped by 2.55%, trading at about $59.80. This decline follows OPEC+’s announcement to increase production by 137,000 barrels per day starting in December. The rise in output could create a surplus in the market, leading to lower prices. US sanctions on major Russian oil producers, Rosneft and Lukoil, may help support prices by tightening global supply. These sanctions involve freezing assets and banning transactions with US companies. At the same time, there is some optimism around US-China trade talks, which might aid prices as plans to lift 100% tariffs on Chinese imports are underway.

API Report and Market Reaction

Now, everyone is looking forward to the upcoming American Petroleum Institute (API) report on oil inventories. If the report shows a larger-than-expected inventory increase, it could put more pressure on WTI prices. The technical outlook suggests that WTI is receiving support near $59.50, but there are still risks ahead. The 100-period Simple Moving Average (SMA) at $59.56 provides some support, but if it breaks, prices could decline further. Resistance is found at $61.00 and $62.38. The Relative Strength Index (RSI), which is below 50, indicates that prices might continue to decline in the short term. The drop in WTI oil to around $59.80 creates a challenge for traders. The main downward pressure arises from OPEC+’s plan to boost production, indicating a potential surplus as we approach winter. This situation is currently the market’s main focus. The OPEC+ decision to add 137,000 barrels per day marks a change from the production cuts seen throughout much of 2023 and 2024. The latest Energy Information Administration (EIA) report, released on October 22, 2025, revealed a surprise increase in U.S. crude inventories of 1.2 million barrels, which adds to fears of oversupply. If OPEC+ increases production further, prices could hit the technical support level around $56.

Counteracting Forces and Volatility

However, there are strong opposing forces that could support prices. New U.S. sanctions on Russian oil producers may tighten global supply more than anticipated. Looking back to the sanctions response in 2022, the initial shock led to a significant price spike, although Russia later found ways to reroute its exports. This history suggests we might see short-term price increases. On the demand side, hope surrounding US-China trade talks is helping stabilize prices. Recent data supports this, as China’s Caixin Manufacturing PMI for September 2025 hit 50.8, indicating modest growth and economic strength. A positive outcome from this week’s summit could quickly recover recent losses. Given these opposing forces, rising implied volatility is likely, making options strategies appealing. A long straddle—buying both a call and a put option with the same strike price and expiration—might be an effective way to trade anticipated price swings without predicting the direction. The key factor will be whether WTI breaks its support level around $59.50 after the upcoming API inventory report. Create your live VT Markets account and start trading now.

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