WTI crude oil futures ended the day at $63.66, rising by $0.14 or 0.22%. The trading range was narrow, reaching a high of $63.93 and a low of $63.31. During the week, oil prices dipped to $61.45 on Monday and tested the falling 100-hour moving average. They then fell to $61.67 on Tuesday. Prices later climbed above the 100- and 200-hour moving averages but returned to the 100-hour average on Thursday. Buyers stepped in to support the price, leading to a rally that peaked at $63.93, the week’s highest point.

Buyers Keep Short-Term Control

Over the week, prices increased by 1.05%. They stayed above the 100- and 200-hour moving averages, showing buyers have some control in the short term. However, prices are still below the 100-day moving average at $64.36 and the 38.2% retracement level from the late July high at $64.91. For buyers to regain stronger control, they need to push prices above these levels. The price action indicates that buyers are gaining short-term control, pushing WTI crude oil above hourly moving averages for a small weekly gain. However, significant resistance is present at the 100-day moving average of $64.36 and the Fibonacci level at $64.91. Traders should closely monitor these levels, as a failure to break and remain above could suggest this week’s rally is merely a temporary bounce in a larger downward trend. This technical outlook is affected by mixed fundamental factors. The latest IEA monthly report, released last week, slightly lowered its global demand forecast for Q4 2025. This adjustment followed a surprising dip in China’s manufacturing PMI data, which fell to 49.7. Concerns over demand from this crucial consumer are keeping prices tethered and making consistent breakout harder. On the supply side, last week’s EIA report revealed a surprising U.S. crude inventory reduction of 3.1 million barrels, which fueled rally momentum in the second half of the week. OPEC+ has also signaled it will maintain current production quotas through the third quarter, providing market stability. This situation keeps supply tight, creating a support level around $61.50.

Immediate Uncertainty and Risk Premium

Adding to the immediate uncertainty, the National Hurricane Center is monitoring a tropical system in the Atlantic with a 60% chance of affecting the Gulf of Mexico early next month. The potential for disruptions to Gulf Coast production and refining could introduce a risk premium in the days ahead. This situation makes aggressive bearish positions riskier until the storm’s path is clearer. We’ve seen similar scenarios in late summer 2023 when prices fluctuated around key technical levels before broader economic fears triggered a significant drop into the fourth quarter. This history highlights that September can be a volatile month for energy markets. The current setup, with prices squeezed between short-term support and major resistance, suggests increased volatility may be on the horizon. Given these mixed signals, derivative traders might explore strategies that benefit from a range-bound market or a sharp rise in volatility. Selling options premium through iron condors with strikes outside the $61-$66 range could be a good strategy for the coming weeks. Alternatively, traders expecting a breakout from the hurricane threat might consider buying straddles for potential significant price movements in either direction. Create your live VT Markets account and start trading now.

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