Oil Market Sensitivity The oil market is currently very sensitive, with U.S. West Texas Intermediate (WTI) crude oil prices close to a potential breakout. These factors are affecting market expectations and emphasize the need to stay updated on developments. With ongoing geopolitical tensions and recent inventory data, there’s a clear chance for oil prices to rise. A warning from the U.S. Secretary of State to Venezuela adds a risk premium that the market hasn’t fully considered. West Texas Intermediate crude is nearing the $88 per barrel resistance level, and a rise towards $95 seems more likely in the upcoming weeks. Traders should think about positioning themselves for this potential increase by considering call options. Buying $90 strike calls for March or April is a straightforward way to profit from a sharp price rise while limiting your maximum risk. This strategy is especially appealing after a recent unexpected inventory drop of 4.1 million barrels reported by the API, indicating tighter supply. Trading Options and Strategies This expected price movement will likely raise market volatility, making options more expensive. Alternatively, traders could use bull call spreads, such as purchasing March $90 calls and selling March $100 calls. This strategy reduces the initial trade cost and can still profit from a gradual price increase, even if it’s not drastic. We can recall a similar phase of price stability in the spring of 2025, when oil prices hovered around $80 for several weeks. This calm ended sharply with production news from OPEC+, leading to a sudden 10% price jump that surprised many. The current scenario, with prices remaining flat for weeks, closely resembles that pre-breakout situation. This week, the key indicator to watch will be the official Energy Information Administration (EIA) inventory report. If the EIA confirms the large decline reported by the API, it might trigger a rise in prices past technical resistance. Last year in 2025, consecutive weekly declines of over 3 million barrels often led to price increases. Create your live VT Markets account and start trading now.

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