West Texas Intermediate (WTI), the standard for US crude oil, has dipped to around $60.00 during Asian trading hours on Wednesday. This drop comes after a significant rise in US crude inventories, according to the American Petroleum Institute (API). The API reported that US stockpiles increased by 6.5 million barrels for the week ending October 31. This is a change from a drop of 4 million barrels the previous week, leading to a total increase of 3.6 million barrels in US crude inventories for the year so far.

Geopolitical Effects on WTI Prices

Geopolitical tensions, especially in the Middle East and Black Sea, could affect WTI prices. Attacks on Russian facilities, like the refinery in Nizhny Novgorod, may push oil prices higher if conflicts escalate. WTI, characterized as light and sweet, is high-quality oil produced in the US. Prices are influenced by supply and demand, OPEC decisions, and inventory reports from both the API and EIA. OPEC plays a key role in managing oil prices through production quotas. Lower quotas tend to raise prices, while higher production can lower them. Reports from the EIA are often seen as more reliable because they come from a government source. This week, the market is facing two opposing forces. The significant increase in US crude inventories is pressing WTI down, nearing the $60 mark. However, escalating geopolitical risks in the Black Sea region are currently supporting prices.

Market Volatility and OPEC+ Meeting

The API’s report of a 6.5 million barrel increase is a bearish signal, the biggest since July 2025. If today’s EIA report shows an increase of over 5 million barrels, it will be almost double the five-year average for this time of year. This could push prices down to the mid-$50s, indicating weaker US demand as winter approaches. At the same time, we can’t ignore the increased attacks on Russian refineries. Recent reports suggest that over 500,000 barrels per day of Russian processing capacity has been affected, echoing disruptions from early 2024 that caused brief price surges. A successful attack on major export terminals could rapidly reverse the current downward trend. The clash between bearish market fundamentals and bullish geopolitical risks is making prices more volatile, with the oil VIX (OVX) now above 35. This suggests traders are expecting larger-than-normal price swings in the coming weeks. For those trading derivatives, short-dated options strategies, like straddles, may be a good way to prepare for significant price movements in either direction. Looking ahead, we must keep an eye on the OPEC+ meeting scheduled for the first week of December. With prices threatening to drop below their comfort zone, they may express a willingness to increase production cuts to stabilize prices. Historically, even verbal signals from OPEC+ members have been enough to create short-term rallies in the oil market. Create your live VT Markets account and start trading now.

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