On November 21st, Ukraine reported that Russia had launched an intercontinental ballistic missile (ICBM) from the Astrakhan region in southern Russia. Russia later clarified it had been a new intermediate-range ballistic missile, but the episode spread concern in the market that the Ukraine war had entered a new phase, supporting WTI's downside.
Alongside this geopolitical factor, forces capping the upside were also present. Against a backdrop of softening global oil demand, expectations emerged that a delay in unwinding OPEC+ voluntary production cuts was possible, and JPMorgan downgraded its global oil demand outlook. With a geopolitical factor supporting the floor and a demand concern capping the ceiling — two forces pulling in different directions — WTI has continued to trade within the $65–75 range.
In the near term, supply-side concern is relatively more prominent, while the medium-term view continues to be weighed down by a softening demand outlook. Separating these two timescales — near-term geopolitical risk and medium-term demand outlook — is likely a useful lens for judging which side of the range is more prone to break.
When forces pulling in different directions are in balance, building a new directional position often carries a risk-reward profile that doesn't justify the trade, making "squaring" — a form of risk management — a rational positioning choice. When the market is in balance, or ahead of a major event, participants can sometimes be observed reducing outright positions to adjust overall book exposure.
November's CFTC data shows precisely this pattern. The most recent positioning report was dominated by squaring on both the buy and sell side, closely reflecting the tug-of-war between geopolitical risk and a soft demand outlook, while data as of November 5th showed an increase in speculative longs, indicating that buy-back and probing-buy appetite strengthened as price approached the lower end of the range. Near a level the range has previously defended, the downside risk of a break is relatively limited, given the level's track record of holding, while the potential gain from a bounce is comparatively large. This asymmetry in risk and reward is what strengthens dip-buying appetite specifically near the edges of the range.
A wait-and-see stance centered on squaring and dip-buying appetite near the lower bound may appear contradictory, but both can be read as consistent behaviors arising from the same underlying state: an inability to commit to a direction amid balanced forces. That said, squaring itself should be understood as a legitimate position — a form of risk management in its own right.
The long-dated forward curve remains at a calm level. The October 29th issue had offered the view that "even if crude prices swing sharply around the U.S. election or other factors, market volatility should remain transient as long as the long curve holds its current level" — and a broadly similar trend has continued into November.
Even amid price swings around the U.S. election or other factors, market volatility should remain transient as long as the long curve holds its level.
Despite a significant geopolitical development — the ICBM launch — the long-dated forward curve has held its moderate level without showing even a hint of disruption.
The long curve's steadiness likely reflects a market that is pricing this geopolitical factor as a risk confined to near-dated contracts and limited in duration. In addition, the expected delay in unwinding OPEC+ voluntary cuts does not signal a surge in supply — if anything, it reflects continued supply discipline — and so has not disturbed the underlying medium-to-long-term supply-demand assessment. The ability to distinguish risk absorbable at the near end of the curve from risk that would force a reassessment of medium-to-long-term supply-demand conditions appears to be what keeps the long curve steady.
November 2024's WTI market has held within a $65–75 range as a geopolitical factor supporting the floor (a new phase in the Ukraine war) balances against a demand concern capping the ceiling (softening global demand, expectations of an OPEC+ unwind delay). Cautious wait-and-see behavior among market participants, together with a long-dated curve that has held its level, appears to function as the structure sustaining this range. As long as this balance holds, neither outright price trading nor spread trading between contract months seems likely to develop strong directional conviction.