WTI US Oil remains steady at $58.30, bouncing back from a five-month low. This stability comes despite bearish US inventory data showing a 7.36 million barrel increase in crude oil stocks. A decline in distillate inventories helps balance the rise in crude stocks. Market sentiment slightly improves as the US urges India to stop buying Russian oil. President Trump mentions that Prime Minister Modi of India has agreed to halt these imports. Japan is also expected to stop importing Russian energy, suggesting a tighter global oil supply.

New UK Sanctions

New UK sanctions focus on Russia’s major oil companies, Lukoil and Rosneft, increasing pressure on Moscow. Meanwhile, the US government shutdown is dampening market sentiment, with a Treasury official noting a weekly economic loss of $15 billion, impacting demand expectations. Oil prices await the EIA Crude Oil Stocks Change data, which is predicted to show a modest increase that could influence supply dynamics. Geopolitical risks and supply uncertainties help keep WTI stable, even amid bearish data. WTI Oil serves as a benchmark in the oil market, swayed by global growth, political instability, and OPEC decisions. Changes in inventory data from API and EIA influence prices, with a drop in inventory suggesting greater demand. The value of the US Dollar also affects oil prices. Currently, WTI crude oil hovers around $58.30, a low price compared to the highs above $100 per barrel experienced after the Ukraine conflict began in 2022. The market faces a tension between negative inventory data and significant geopolitical threats to supply, providing traders with potential opportunities.

Ongoing US Government Shutdown

On the downside, the ongoing US government shutdown is impacting demand forecasts. With an estimated economic toll of $15 billion weekly, it’s unsurprising that the International Energy Agency (IEA) has reduced its global demand growth forecast for the fourth quarter. The API’s large 7.36 million barrel increase in crude stocks adds to the picture of weakening consumption. However, supply dynamics are tightening, creating a stronger bullish outlook. India has been a significant buyer of Russian seaborne crude since 2022, recently importing over 1.5 million barrels per day. If US pressures lead to reduced demand from India, this would disrupt global oil flows significantly. This geopolitical risk might explain why oil prices have stabilized rather than dropped further after the inventory report. Additionally, a WTI price below $60 could concern OPEC+, which is already withholding over 3 million barrels per day to stabilize prices. The cartel may indicate further production cuts if prices stay weak. Given the current situation, we expect increased volatility in the coming weeks, as indicated by the oil volatility index (OVX), which has risen to a three-month high. Traders might use options strategies like straddles or strangles to profit from large price swings in either direction. Options can help traders manage risk while anticipating supply threats or potential downturns due to weak demand. The immediate focus is on the EIA inventory data expected later today. A confirmation of the large crude build could push prices down to test the recent low of $57.33, while a smaller increase or an unexpected decrease may trigger a sharp rally. Be ready for whichever way the market moves. Create your live VT Markets account and start trading now.

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