Crude oil prices have risen today but are still struggling to bounce back from last week’s drop, which began with rumors of an OPEC+ production increase. Those rumors are now confirmed, with an extra 137,000 barrels per day expected in the market next month. The pace of this output increase might continue until all voluntary cuts are either reversed or exceeded. The current crude price chart indicates a delicate situation. The $60 support level may need to be tested, and if it fails, prices could fall back to earlier lows.

Oil Market Overview

Right now, the oil market shows some strength, but talks of increased Chinese stockpiling suggest this may not last. This could lead to a serious market downturn. Still, lower oil prices could create opportunities, as prices around $55 per barrel are likely not sustainable. Globally, exploration spending is near $10 billion a year and may decrease further. Moreover, US shale operations are running low on Tier 1 inventory, and drilling activity is dropping. We could see a supply shortage in late 2026 or 2027, when OPEC might have little to no extra capacity available, marking a key moment for the market. We are now in a market where increased supply is a confirmed reality, not just hearsay. OPEC+’s decision to add 137,000 barrels per day next month is putting pressure on prices, which haven’t bounced back from last week’s losses. This hints at a bearish outlook for the near term. The crude oil price chart is in a weak position after breaking a key support level. We need to keep a close eye on the $60 per barrel mark. If prices drop below this, we could see a swift sell-off similar to the “Liberation Day” plunge we noticed in bond yields earlier in 2025. Strong demand, partly from Chinese stockpiling, has been a key support for prices, but that seems to be fading. Recent customs data indicated that China’s crude imports for August 2025 fell by 2% to 10.8 million bpd, suggesting their strategic buying may be slowing down, which removes significant support for the market.

Preparing for Future Market Trends

Looking ahead, the path of least resistance seems to point downward, making bearish positions appealing. Traders might consider buying put options with strike prices at or below $60 to profit from potential price declines. Selling call spreads could also express this outlook while managing risk. However, we must remember that prices around $55 are not sustainable in the long run. The recent EIA report from early September 2025 noted that productivity from new wells in the Permian Basin has dropped for five consecutive months. This decline in US shale inventory is critical and sets the stage for a future supply crunch. While the short-term outlook is bearish, we should prepare for a significant market reversal in 2026 or 2027. Savvy traders might look to slowly buy long-dated call options during any significant price drops in the next few weeks. These options could be very affordable if panic drives prices down but hold great potential for profit when supply shortages finally hit. Create your live VT Markets account and start trading now.

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