WTI Crude Oil has dropped below $60 per barrel, marking a one-week low after three days of losses. This decline comes after the US Energy Information Administration (EIA) reported an unexpected inventory increase, with crude stocks rising by 5.202 million barrels—much higher than the expected 1.8 million barrels. US crude production stays near record levels at 13.65 million barrels per day, and net crude imports have risen to 1.56 million barrels per day (bpd). Although OPEC+ has agreed to a slight output increase of 137,000 bpd for December, they plan to hold back further hikes to avoid oversupply.

Global Manufacturing Data

Global manufacturing data shows weak demand. The Eurozone’s PMI for October is at 50, and the US ISM Manufacturing PMI is at 48.7. In China, the official NBS Manufacturing PMI stands at 49, indicating ongoing challenges in this sector. The strengthening US Dollar, combined with inconsistent manufacturing data and rising oil inventories, is putting pressure on WTI Crude Oil. WTI is a key oil benchmark globally, influenced by supply and demand trends, as well as decisions made by OPEC and OPEC+. Weekly oil inventory reports by API and EIA affect WTI prices since changes reflect supply-demand shifts. OPEC’s production decisions can also sway prices, as lower quotas often lead to price increases.

Market Positioning

Since WTI crude oil has fallen below the critical $60 per barrel level, we should prepare for continued downward pressure. The recent drop is largely due to an unexpected 5.2 million barrel increase in inventory, which indicates supply is exceeding weak demand. Market sentiment has turned bearish, suggesting that short-term price increases could be opportunities to establish short positions. The outlook for demand looks weak, supporting a bearish stance. Weak manufacturing PMIs from China and the US are not recent developments; the J.P. Morgan Global Manufacturing PMI has stayed near or below the 50-point mark for much of 2025. This ongoing weakness implies a significant rebound in oil consumption is unlikely soon, especially as we approach winter. On the supply side, US crude production at nearly 13.65 million barrels per day poses a major challenge for prices. This trend has been evident throughout 2024, showing that American producers are resilient to price changes. OPEC+’s choice to pause production increases rather than implement deeper cuts suggests they are reluctant to lose more market share to maintain prices. For derivative traders, this market climate favors strategies that thrive on falling prices or high volatility. Buying put options can be a direct way to bet on further declines, potentially targeting support levels in the low $50s that we haven’t seen since mid-2024. Alternatively, selling call options with strike prices well above $65 could yield premiums, betting that a significant price recovery is unlikely in the near future. We should also keep an eye on geopolitical risks, as they can suddenly alter market conditions. Any unexpected tensions in the Middle East or disruptions to vital shipping routes could quickly change the current supply and demand balance. Previous volatility spikes in 2022 and 2024 remind us that such events can lead to sharp, unpredictable price increases that could challenge any bearish outlook. Create your live VT Markets account and start trading now.

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