West Texas Intermediate (WTI) crude oil fell to $56.82 per barrel on Monday morning during the European session, down from $57.24 at the end of Friday. Meanwhile, Brent crude stayed stable at around $61.25. WTI is a light and sweet crude oil with low gravity and sulfur content, making it easy to refine. Mostly sourced from the US, its price often serves as a benchmark for the crude oil market.

Factors Influencing WTI Prices

The price of WTI is influenced by supply and demand, affected by global economic growth, political instability, and OPEC’s decisions. The value of the US dollar also plays a role since oil is traded in dollars. Weekly oil inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact prices. Lower inventories may indicate rising demand, pushing prices higher. Conversely, higher inventories signal increased supply, which can drive prices down. OPEC, made up of twelve oil-producing countries, influences WTI prices through production quotas. Changes from their biannual meetings can limit or increase supply, affecting prices. The expanded OPEC+ includes ten non-OPEC countries, such as Russia. With WTI crude oil starting the week down at $56.82, we are seeing immediate pressure due to signs of weakening global economic health. This price drop raises concerns that demand will not match supply in the months ahead, a critical factor for traders to monitor. The demand outlook has been clouded by recent data from major consumers. For example, China’s third-quarter GDP growth for 2025 was 3.9%, falling short of the 4.4% forecast and indicating a slowdown. Similarly, Germany’s industrial production declined for the second quarter in a row, suggesting weak demand from both Asia and Europe. On the supply side in the US, commercial crude inventories have unexpectedly grown over the past three weeks. Last Wednesday’s EIA report showed an increase of 2.1 million barrels, while analysts had expected a slight draw. This persistent surplus indicates that production levels are exceeding consumption, limiting potential price increases.

Market Outlook and Strategies

Looking ahead, the U.S. Dollar Index (DXY) remains strong at around 107.5, with the Federal Reserve indicating it will keep interest rates steady through the end of 2025 to address lingering inflation from 2022 to 2024. A strong dollar makes oil more expensive for holders of other currencies, typically reducing global demand. This trend is expected to continue through the fourth quarter. In light of these factors, traders should brace for ongoing price weakness but also be alert for sudden changes from OPEC+. While the current trend is bearish, there are hints that the group may hold an emergency meeting if prices drop below $55, similar to their actions in 2023 to stabilize the market. Thus, buying put options to protect against further declines while selling covered calls to generate income in a possibly range-bound market could be a smart strategy. Create your live VT Markets account and start trading now.

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