Oil Prices Swing on OPEC Output Decision and Geopolitical Escalation

Key Takeaways:

*Prices rebounded as traders viewed the planned output hike as slower than expected.

*Russia’s major strikes and looming U.S. “phase two” sanctions stoked fears of supply disruptions.

*China’s CPI and OPEC’s monthly report this week will be critical in shaping short-term price direction.

Market Summary:

Oil prices opened the week with notable volatility, as West Texas Intermediate (WTI) crude swung more than 2% before settling 0.79% higher. The market initially reacted to OPEC+’s confirmation of a planned production increase but quickly reversed losses as traders interpreted the move as gradual and unlikely to overwhelm demand. The cartel’s decision to raise output by 137,000 barrels per day in October was viewed as measured, easing concerns of an imminent supply glut.

Geopolitical tensions provided further support, as Russia launched one of its largest aerial assaults on Ukraine over the weekend, escalating military conflict and triggering a coordinated Western response. Former U.S. President Donald Trump indicated that a “second phase” of sanctions targeting Russia is under development, raising speculation about potential disruptions to Russian energy exports—a key factor underpinning the late-session rebound.

Looking ahead, market participants are turning to key fundamental catalysts for near-term direction. China’s Consumer Price Index (CPI) data, due Tuesday, will be closely watched for signals on economic activity and energy demand in the world’s largest crude importer. Additionally, OPEC’s monthly market report—scheduled for release on Thursday—will offer updated insights into global supply-demand balances and the group’s production outlook.

With volatility expected to remain elevated, WTI crude is likely to test resistance near $65.00, while downside support remains firm around $62.50. A break above recent highs could gain momentum if geopolitical risks intensify or if upcoming data reinforces a constructive demand outlook.

Technical Analysis

USOIL, H4:

Oil prices exhibited significant volatility in recent trading, oscillating between a session low near $61.85 and a key liquidity zone around $63.50. The commodity ultimately failed to sustain upward momentum, closing below the $63.50 resistance level and signaling a potential shift in near-term sentiment toward a bearish bias.

The price action reflects growing uncertainty over both supply and demand dynamics. While geopolitical tensions continue to lend sporadic support, broader concerns around global economic growth and inventory levels are weighing on the market. The inability to hold above the $63.50 level—a zone that has previously attracted buying interest—suggests weakening bullish conviction.

Momentum indicators further support the deteriorating technical outlook. The Relative Strength Index, while having retreated from overbought levels, remains elevated yet is trending lower, indicating building selling pressure. More notably, the Moving Average Convergence Divergence has crossed below its zero line and continues to edge downward, confirming that bearish momentum is accelerating.

Resistance Levels: 65.45, 67.90

Support Levels: 60.40, 58.10