Trading Update 5th October 2025

Brent Crude Dips as Supply Rises and Demand Weakens

Over the week from September 28 to October 5, 2025, the oil market shifted decisively toward a softer stance. Traders reevaluated near-term tightness after a string of supply and demand signals indicated that more barrels were available than previously thought. Headlines about OPEC+ output adjustments and larger-than-expected inventory builds in the United States took centre stage. At the same time, demand cues from major economies lacked the punch markets needed to offset rising supply. The result was renewed selling pressure across crude benchmarks and a notable wobble in energy stocks.

For active spread bettors and short-term traders, that week highlighted how quickly sentiment can swing when supply expectations change. Shorter timeframes proved vulnerable to headline risk. In the longer term, investors faced the familiar balancing act: do geopolitical risks still merit a premium, or will fundamentals prevail? The market answered that week by favouring fundamentals, at least for the near term.

Brent Crude: Price Moves, Technical Picture and Momentum

Brent crude moved lower through the week, slipping from the mid-$60s to test support near the low $60s. The contract registered a multi-month low early in the period, followed by modest bounces that tested nearby resistance levels. Technically, the market lost a series of short-term moving averages and saw downside momentum accelerate once key support levels failed.

Price action exhibited a pattern familiar in corrections: initial selling pushed Brent below technical support, followed by relief rallies that encountered sellers near prior support levels. That tug-of-war left volatility elevated. For traders, the clearest lesson was to treat intraday rallies as opportunities for disciplined positioning rather than signs of a durable reversal. Risk management and attention to stops remained the key factors in preventing small losses from becoming large drawdowns.

Supply Signals: OPEC+ Positioning and Inventory Flows

Supply dynamics dominated the narrative. OPEC+ moved to increase output modestly, which signalled willingness to meet demand and defend market share. That choice came after months of tight rhetoric and tighter quotas. The key takeaway for markets was simple: incremental supply gains reduce the margin of error for bullish forecasts.

At the same time, U.S. commercial crude inventories rose more than some traders expected. When governments and industry reports point to stock builds, traders often shift from fearing a shortage to worrying about oversupply. Additionally, production from resilient non-OPEC sources continued to increase, while several major consumers conducted regular procurement campaigns. All of these elements combined to create a clearer view that supply might outpace demand over the coming months, unless there are any surprises.

Demand Signals and the Macro Backdrop

Demand cues during the week offered little comfort. European economic indicators softened, signalling lower industrial activity. Asian demand recovered cautiously, but not at a pace that would absorb growing supply. In the United States, mixed data and political uncertainty dented confidence about consumer spending and fuel usage.

Currency and macro moves also mattered. A firmer US dollar made dollar-priced oil more expensive for many buyers, weighing on physical demand. Meanwhile, central bank commentary and inflation trends kept traders guessing about growth prospects. Taken together, the macro mix reinforced a subdued demand story, leaving oil vulnerable to supply-side news.

Energy Stocks and Market Sentiment

Softer oil prices were predictably reflected in equity markets. Upstream producers and exploration companies saw share prices weaken relative to broad indices. Margins for independent explorers, often more sensitive to spot price moves, came under pressure. Refiners also faced squeezed spreads where cracks failed to keep pace with crude weakness.

Investor flows shifted toward defensive and yield-oriented sectors as energy lost its short-term appeal. The rotation was evident in index performance and in sector ETFs, where energy holdings lagged behind other groups. For equity traders, the message was clear: manage exposure to names with high operating leverage, and watch margin guidance from majors for signs of stress or opportunistic investment.

Politics and Geopolitics: The Background Risk

Politics continued to influence price movements. Within OPEC+, competing priorities between member states produced negotiation noise. Some producers pushed for output restraint to defend prices, while others favoured maintaining or growing market share. That internal dynamic injected uncertainty about how durable any agreement might be.

Geopolitical tension in the Middle East and trade realignments added an overlay of risk. Even when fundamentals leaned bearish, politics could still deliver short, sharp upward moves if supplies faced disruption. Conversely, diplomatic agreements and shifting trade patterns—such as buyers switching suppliers due to economic or political reasons—can dampen price reactions. Traders found themselves balancing these opposing forces, pricing in both the real and the potential.

What This Means for Spread Bettors and Short-Term Traders

For spread bettors, the week underscored two practical points. First, news-driven volatility can amplify gains and losses quickly. Position sizing and stop discipline mattered more than ever. Second, the correlation between oil and energy equities tightened during the move, which allowed multi-market strategies but also magnified sector risk.

Tactical approaches that were effective included selling rallies into resistance and utilising options or spreads to cap downside risk while preserving upside potential. Staying alert to scheduled inventory reports and OPEC+ communiqués offered the best chance of anticipating swings. For those trading over weekends or political events, trimming positions ahead of high-risk windows proved prudent.

Key Takeaways for Traders and Investors

• Brent crude weakened through the week, testing low-$60 support on a mix of supply and demand cues.
• OPEC+ output intentions and U.S. inventory builds shifted sentiment toward a more bearish near-term outlook.
• Demand signals from Europe, Asia and the U.S. remained subdued, limiting bullish catalysts.
• Energy equities underperformed broader markets as lower crude prices compressed margins.
• Geopolitical noise kept a risk premium alive; unexpected disruptions can still produce quick reversals.
• For spread bettors, strict risk control, event awareness, and tactical use of spreads and options proved essential.

Keep an eye on the oil prices here.