**Technicals And Price Levels** WTI crude prices are trying to stabilize, but market conditions have changed a lot since prices were around $60 per barrel. As of late October 2025, WTI is trading in a fluctuating range of about $85. This change is due to mixed signals regarding supply and demand. In contrast to past worries about small OPEC+ output increases, the group has now hinted at a possible cut of 500,000 barrels per day to support prices as we move into 2026. A major ongoing issue is the oversupply from non-OPEC countries, similar to what we experienced previously. According to the latest report from the Energy Information Administration in October 2025, U.S. crude production has reached a record 14.1 million barrels per day, exceeding past highs. This high production keeps any price increases in check and is crucial for traders who expect prices to fall. **Demand Side Concerns** On the demand side, worries have shifted from previous trade agreements to new signs of economic weakness. The latest Caixin Manufacturing PMI from China stands at 49.8, indicating a slight contraction. This raises concerns about reduced energy consumption in the world’s largest oil importer. This uncertainty about demand poses a more immediate risk to prices than the older geopolitical issues from the Trump era. For derivative traders, the current scenario of a tough OPEC+ facing weak demand and high U.S. supply suggests that volatility will be high in the coming weeks. The CBOE Crude Oil Volatility Index (OVX) is currently at 38, reflecting market tension. This environment makes long option strategies like straddles or strangles appealing, as they can profit from significant price movements in either direction without needing to predict the outcome of the supply-demand struggle. Another strategy is to use calendar spreads to take advantage of short-term uncertainty while maintaining a clearer long-term perspective. We could sell front-month call options to benefit from premium decay due to expected bumpy, range-bound trading. At the same time, we can purchase longer-dated calls to keep a bullish stance in case OPEC+ production cuts lead to tighter markets next year. Create your live VT Markets account and start trading now.

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