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Over the past month, West Texas Intermediate (WTI) crude oil prices have traded within a tight band, repeatedly gravitating toward $65 per barrel, the estimated breakeven point for many U.S. shale producers.1
Despite intermittent price surges triggered by geopolitical risk and seasonal demands, market fundamentals have repeatedly acted to restrain any sustained rallies in oil prices.
Supply-Side Pressures Keep Oil Prices in Check
OPEC+ has been a key driver of recent price movements. In early July, the group accelerated the unwinding of prior production cuts, with Saudi Arabia significantly exceeding its quota.2 The announcement of further increases for August, and potentially September 2025, introduced a wave of bearish sentiment as the market digested the implications of rising global supply amid only modest demand growth.3
Compounding oversupply concerns are increasing inventory levels in the U.S. and China. Chinese strategic reserve purchases and robust U.S. natural gas liquids output contributed to stock builds,4 muting the bullish effects of seasonal refinery demand during the summer travel season.5
Signs of Slowing U.S. Production Growth
While U.S. production remains elevated, the trend shows signs of deceleration. According to the EIA and Baker Hughes, the U.S. rig count has fallen for 11 straight weeks, now at its lowest point since October 2021,6 even as the Trump Administration continues to encourage more drilling to lower oil prices and inflation overall.
The number of drilled but uncompleted wells (DUCs) has also hit a record low.7 In response, the EIA revised its forecast for 2025 U.S. crude output growth downward by 50,000 barrels per day.8
Brief Price Spikes From Geopolitical and Economic Events
Fleeting upward price momentum emerged during recent months, driven by events such as tensions in the Middle East, including Israeli strikes on Iranian targets and Houthi maritime attacks in the Red Sea, which briefly lifted WTI above $80.
However, these spikes were quickly erased as ceasefires took hold and the market’s focus returned to fundamentals.
This chart of daily WTI Spot Oil Prices9 illustrates a general return to stability following these recent influencing factors:
WTI Spot Prices - July 2025
On the demand side, disappointing economic indicators from the U.S. and China further weighed on sentiment. Weak U.S. capital goods orders and slowing Chinese industrial activity have cast doubt on near-term consumption growth, reinforcing the oil price ceiling. Although spot prices climbed above $70 at the end of July, oil futures prices are around $64 per barrel.
A Market Anchored to Breakeven Price for New Wells
Despite multiple catalysts that could have propelled oil higher, the combination of rising supply, slowing demand, and ample inventories has repeatedly dragged WTI back toward its $65 per barrel breakeven level for new drilling. While future trade deals or unforeseen supply disruptions may still spark future price volatility, the past month underscores the strength of current market anchors. In the absence of structural shifts in demand or a major supply disruption, $65 per barrel appears to be a gravitational center for WTI, offering both a floor for producers and a ceiling for speculators in the current environment.
WTI Strip Prices Decrease
Spot prices and futures prices for the West Texas Intermediate (WTI) contract decreased approximately $3.25 per barrel in the near term and decreased approximately $1.75 over the longer term.
WTI Strip Prices - One Month Change
As shown, the oil price curve is in a state of “backwardation,” reflecting the market’s expectation of lower future spot prices.
Oil Price Outlook
The price distribution below shows the crude oil spot price on August 11, 2025, as well as the predicted crude oil prices based on options and futures markets. Light blue lines are within one standard deviation (σ) of the mean, and dark blue lines are within two standard deviations.
WTI Crude Oil $/BBL
Based on these current prices, the markets indicate there is a 68% chance oil prices will range from $52.00 and $74.00 per barrel in mid-November 2025. Likewise, there is roughly a 95% chance that prices will be between $37.00 and $108.00. By mid-January 2026, the one-standard deviation (1σ) price range is $50.00 to $76.50 per barrel, and the two-standard deviation (2σ) range is $33.50 to $122.50 per barrel.
Insights
Remember that while option prices and models reflect expected probabilities rather than certain outcomes, they remain a useful tool for assessing market expectations and risk. Throughout most of 2023 and 2024, crude oil spot prices generally fluctuated within the range of $70 to $90 per barrel. During that period, we observed general increases in futures price volatilities as prices approached the upper and lower bounds of that range. In recent months, crude oil spot prices have generally remained below that range, apart from a brief spike driven by the conflict between Israel and Iran. For mid-January 2026 pricing as of August 11, 2025, the 1σ range had a spread of $26.50 per barrel, and the 2σ range had a spread of $89.00 per barrel, indicating a general increase in spreads as the market remains uncertain about future price expectations.
- Greg Scheig, “Drilling Economics: Why Trump’s Push for Cheap Oil Faces Resistance,” Stout, June 3, 2025, citing Dallas Fed Presentation at the ASA EVC.
- Oil Market Report - July 2025, International Energy Agency (IEA), webpage, July 2025.
- Mia Gindis, “Oil Falls as US Trade Deal Optimism Wanes, Dollar Strengthens,” Bloomberg, July 24, 2025.
- Scott Disavino, “Oil Prices Ease as Negative Economic News Offsets Trade Optimism,” Reuters, July 25, 2025.
- John E. Paisie, “What’s Affecting Oil Prices This Week? (July 21, 2025),” Hart Energy, July 21, 2025.
- BakerHostetler, Energy Watch, email, July 16, 2025.
- Scott DiSavino, “US oil/gas rig count down for 11th week to lowest since 2021, Baker Hughes says,” Reuters, July 11, 2025.
- Baker Hostetler, Energy Watch, email, July 16, 2025
- “Petroleum & Other Liquids,” U.S. Energy Information Administration, webpage.
