Crude oil prices are on the rise as traders consider potential sanctions and possible rate cuts from the Federal Reserve. Last week, oil seemed ready to climb to the $70.00 level after breaking key technical levels, but it dropped to around $61.45. This decline was driven by expectations that OPEC+ would raise output and concerns over weak economic data from the U.S. OPEC+ has decided to increase output by 137,000 barrels per day, with more increases depending on market conditions. This could potentially reverse the previous cut of 1.66 million barrels. This cautious strategy positively influenced oil prices. New sanctions against Russia might raise prices further, although historically, sanctions have had limited effects because of shadow markets.

Technical Analysis And Market Drivers

From a technical perspective, the daily chart indicates that oil tested the trendline near the $64.00 mark before dropping and rebounding at $61.45. On the 4-hour chart, prices are nearing the crucial $64.00 area. Sellers anticipate a decline, while buyers hope for a rise to $66.00. The 1-hour chart shows a small upward trend, suggesting bullish momentum, with buyers aiming for new highs and sellers expecting a drop. We are looking for important data in the coming days, including the U.S. PPI report on Wednesday, the CPI data and jobless claims on Thursday, and the University of Michigan Consumer Sentiment report on Friday. We are closely monitoring crude oil after its bounce from the $61.45 level last week. The market is now testing the important $64.00 zone, responding to the cautious outlook from the early September OPEC+ meeting. This movement indicates traders are considering supply stability against potential economic challenges. The case for immediate rate cuts by the Fed, which would typically boost demand, has weakened. Last week’s data showed the U.S. Consumer Price Index for August 2025 was unexpectedly high at 3.4%, complicating the Fed’s decisions. This shifts attention to supply-side factors for price support.

Options And Trading Strategies

On the supply front, conditions remain tight, supporting the recent price rebound. A Reuters survey on August 2025 production revealed that OPEC+ compliance with cuts is over 95%. Additionally, G7 leaders recently threatened to tighten enforcement of the price cap on Russian oil, adding to the geopolitical risk. Given the clash between persistent inflation and tight supply, we should expect ongoing volatility. Derivative traders might explore strategies like straddles around the $64 level, preparing for significant price movements in either direction. This method avoids the need to predict the market’s ultimate direction in the near future. For traders with a specific view, options can offer clear, risk-defined strategies. Those who believe in supply concerns might consider call options with strike prices above $66. In contrast, traders betting that fears of an economic slowdown will prevail could opt for put options targeting a decline below the recent $61.45 low. This pattern of volatility is not new; we observed similar sharp reactions to OPEC+ headlines throughout late 2023 and 2024. Often, initial sell-offs on production hike rumors were later reversed once the market absorbed the conditional nature of supply increases. This historical perspective suggests the recent bounce from lows could persist, but economic data will remain a critical factor. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now