West Texas Intermediate (WTI) crude oil has risen slightly, trading close to $59.10, up nearly 1.00%. This comes despite a report from the US Energy Information Administration (EIA) showing a 574,000-barrel increase in crude inventories, which was unexpected since analysts anticipated a 1.9 million-barrel drop. Gasoline and distillate stocks also increased significantly, indicating weaker demand. Geopolitical tensions remain high, especially as talks between the US and Russia about Ukraine have stalled. These concerns, along with fears of a global oversupply, are impacting market predictions. WTI’s price is currently held back by a descending trendline and the 21-day Simple Moving Average, which presents immediate resistance around $59.50.

Key Resistance And Support Levels

To push higher, WTI needs to break above this resistance area to reach the next target between $60.50 and $62.00, supported by the 100-day SMA. On the downside, the first support level is near $58.00, with further backing found around $57.00, which is where November’s lows are. Momentum indicators show mixed signals. The Moving Average Convergence Divergence (MACD) sits just above the signal line, suggesting a decline in bearish momentum. The Relative Strength Index (RSI) is neutral at around 48, while the Average Directional Index (ADX) at 12.7 indicates no strong trend. WTI is holding near $59 a barrel, but the data hints at weakness. The recent EIA report showed a surprise inventory increase of 574,000 barrels, followed by another report confirming a further build of 1.1 million barrels. This trend points to decreasing US demand as we move further into winter. The global economic outlook also supports this cautious stance for the weeks ahead. The weaker-than-expected US jobs report for November 2025 joined with China’s Caixin Manufacturing PMI, which came in at 49.5, indicating a contraction in factory activity. Together, these figures suggest ongoing slowdowns in fuel consumption from the two largest economies.

Supply And Trading Strategies

On the supply front, the early December OPEC+ meeting led to an extension of voluntary production cuts, but the market’s response has been subdued. We saw similar reactions in late 2023 when doubts about compliance with these cuts limited any significant price increases. This history suggests traders might be reluctant to consider tighter supply until there’s clear evidence of reduced production. For traders in derivatives, the current situation favors selling call options or creating call credit spreads with strike prices above the strong resistance area of $60.50 to $62.00. This approach would benefit from the expectation that the trendline and weak fundamentals will keep prices from rising. The low Average Directional Index (ADX) reading of 12.7 further indicates the lack of a strong trend, making range-bound strategies more appealing. On the flip side, since prices are just above key support levels, buying put options with strike prices at or below $58.00 could provide a low-risk opportunity to profit from a potential downturn. A significant drop below the November 2025 lows around $57.00 could lead to increased selling. Traders should stay alert to the mixed momentum indicators, as an unexpected escalation in geopolitical tensions related to Ukraine could trigger a short squeeze. Create your live VT Markets account and start trading now.

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