Understanding the WTI Benchmark

WTI Oil is a type of crude oil and serves as a global benchmark. It’s called “light” and “sweet” because it has a low density and low sulphur content. Prices of WTI are influenced by several key factors, including global economic growth, political events that affect oil supply, and production decisions made by OPEC. Weekly oil inventory reports from the API and EIA also impact prices by providing insights into supply and demand changes. OPEC is a group of 12 oil-producing countries that makes important decisions regarding oil production, which directly affects WTI prices. OPEC+ includes Russia, further influencing production strategies and pricing in the global market. Recently, WTI prices have risen due to new U.S. sanctions on Russian energy companies, raising concerns about supply. Prices are currently testing a crucial resistance level around $61.70, which aligns with the 50-day moving average. If prices break above this level and close there, it would signal a bullish trend for the weeks ahead. Given this technical setup, traders might consider long positions, such as buying call options with strike prices above $62.00. The latest EIA report shows a surprising crude inventory drop of 3.8 million barrels for the week ending October 17th, 2025, when a small increase was expected. This unexpected decrease indicates strong demand, supporting the ongoing rally.

Strategizing For Potential Breakout

History shows that geopolitical events can lead to significant price changes, similar to the fluctuations seen during the 2022 energy crisis. The new sanctions, which focus on specific offshore projects, are creating a unique type of supply uncertainty. The rising ADX indicator signals a strengthening trend, suggesting that the current upward movement has momentum. However, if prices can’t break through the $61.70 resistance, traders should brace for a pullback toward the $59.60 support level. A rejection at this ceiling could provide a chance to buy put options or wait for a better entry point. The Relative Strength Index is recovering from oversold levels but hasn’t reached overbought territory, indicating further upward potential. Additionally, the recent decline of the U.S. Dollar, with the DXY index dropping from 106 to near 104 in the last month, supports the bullish outlook. A weaker dollar makes oil cheaper for buyers using other currencies, which can boost demand. This favorable economic trend works well alongside the supply shock from the sanctions. For the upcoming weeks, a sound strategy would be to use options to manage risk while gearing up for a potential breakout. Buying call spreads could help traders aim for the next resistance level around the 100-day moving average at $64.20. This method allows them to benefit from price increases while limiting risk if the rally stalls at the current resistance. Create your live VT Markets account and start trading now.

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