WTI Crude Oil is currently near its highest point in two weeks, priced around $58.33 per barrel. This rise follows three days of gains after previously testing the $55 mark, largely supported by heightened tensions between the U.S. and Venezuela. On a technical level, WTI has regained the 21-day Simple Moving Average at about $58.04. However, it faces resistance at around $60, where the 100-day SMA is located. If it can’t break through this barrier, we may see prices fall back below $55, heading toward multi-year lows.

Momentum Indicators Show Bullish Sentiment

Momentum indicators, such as the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD), indicate bullish sentiment is increasing. The RSI is approaching 50, and the MACD is in positive territory, signaling improved momentum. WTI, or West Texas Intermediate, is a lighter and sweeter type of crude oil mainly produced in the U.S. and distributed through the Cushing hub. Its prices are influenced by the balance of supply and demand, global economic growth, geopolitical issues, and OPEC’s production levels. Weekly inventory reports from the American Petroleum Institute and the Energy Information Administration also impact prices. These reports show shifts in demand and supply levels. OPEC decisions further influence WTI prices by altering production quotas. WTI crude is holding around $58.33 per barrel as we approach the holiday season. Low trading activity has created a quiet market, but last week’s unexpected EIA report, showing a reduction of 2.1 million barrels, is providing some support. This price is part of a modest recovery from the earlier test of $55.

Trading Strategies and Market Outlook

The improving momentum indicators, like the MACD, suggest that bullish sentiment is returning to the market. Short-term call options with strike prices just above the immediate resistance of $58.58 may be a good strategy. This bullish outlook is supported by OPEC+ extending production cuts through 2025, which helps prevent major sell-offs. That said, caution is warranted since the $60 level is a strong resistance point, bolstered by the 100-day moving average above. In the past, especially during the range-bound markets of 2024, failing to break through significant psychological levels has led to sharp reversals. Given the IMF’s modest global growth forecast of 3.2% for 2025, a sustained rally above this level seems unlikely without new developments. For derivative traders, this situation suggests using options to manage risk around this critical point. Buying protective puts with a strike price below the solid $55 support level could safeguard against a potential downturn in the new year. If prices stay below $60 as trading volume increases, strategies like selling call spreads could leverage the strong resistance. Looking at the overall landscape, we are witnessing a classic conflict between opposing supply forces. While OPEC+ is restricting production, the U.S. continues to produce oil at record levels, with the Energy Information Administration predicting American crude output to remain at an all-time high in 2025. This scenario is likely to keep prices within a broad range, making significant price moves in either direction hard to maintain. Create your live VT Markets account and start trading now.

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