Crude oil prices have bounced back to $60.00 as market tensions ease. Recent Ukrainian attacks on Russian oil refineries have eased worries about oversupply. Reports from the US Energy Information Administration revealed a surprising increase in oil stocks by 5.20 million barrels, further pressuring prices. On Thursday, oil prices rose during the European trading session, reversing losses from earlier in the week. West Texas Intermediate (WTI), the US benchmark, surpassed $60.00, moving up from its two-week lows but still below the $62.40 peak seen in late October.

Market Sentiment Changes

A shift in market sentiment led to a rise in crude prices. Reports of Ukrainian military strikes on Russia’s Volgograd oil refinery and drone attacks on the Saratov refinery, capable of producing 4.8 million metric tons annually, helped to reduce concerns about oversupply. Despite this increase, crude prices remain low. Ongoing worries about oversupply persist as OPEC and its allies continue with their production plans. Economic slowdowns in major countries indicate a potential decrease in demand. WTI Oil, produced in the US and moving through Cushing, affects global oil markets. Its price depends on supply-demand shifts, geopolitical stability, and OPEC decisions. Weekly inventory reports from the API and EIA shed light on supply-demand changes, impacting oil prices.

Oil Market Volatility

With WTI crude rising above $60.00, we observe a conflict between short-term geopolitical issues and medium-term market fundamentals. The recent rise in prices is linked to Ukrainian strikes on Russian refineries, introducing concerns about supply, which creates a temporary price floor as the market reacts to potential disruptions. However, the broader outlook appears negative, likely limiting any long-term positive perspectives. The International Monetary Fund’s latest forecast from October 2025 revised global growth predictions for 2026 downward, citing weakening demand in both China and Europe. Alongside OPEC+ sticking to output increases, this suggests that the market will remain well-supplied for now. For derivative traders, the current environment promises increased volatility rather than a clear upward trend. The recent 5.2 million barrel inventory increase reported by the EIA is the largest since spring 2025, confirming weak underlying demand. Therefore, we see the current price strength as a chance to sell, potentially through selling call spreads or establishing short positions as prices approach the late-October high of $62.40. This scenario is favorable for options traders who can benefit from a market that stays within a certain range, occasionally spiking. Selling premium using strategies like iron condors could work well, especially if positions are closely managed around major news releases. Keep an eye on the weekly EIA reports; another significant inventory build could erase the current geopolitical premium and see WTI prices return to the mid-$50s. We’ve witnessed similar patterns before, especially during the initial refinery attacks in 2024. Those incidents caused quick yet fleeting price spikes that eventually faded as the market returned to focus on the broader supply-demand picture. We anticipate any future rallies from similar news to be temporary, presenting chances to take advantage of the situation rather than chase upward movements. Create your live VT Markets account and start trading now.

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