Oil prices have shown remarkable stability, remaining in a narrow range since mid-October, with West Texas Intermediate (WTI) crude fluctuating around $70 per barrel. This rangebound trend has been characterized by a significant drop in volatility, with recent levels at their lowest since August. Despite ongoing geopolitical risks, such as the tensions between Iran and Israel and the potential impacts of a second Donald Trump presidency, traders have remained cautious. The market's current situation reflects a balance between expectations for future oversupply and near-term supply tightness.

A key development in the oil market is the reduction of the geopolitical risk premium that had previously supported oil prices when there were fears of escalating conflicts in the Middle East. The market has shifted its focus toward OPEC+'s upcoming decision on production policy, which is set to be announced on Thursday. This decision could shape the direction of oil prices in the near term. Moreover, traders are awaiting clearer indications of how a second term for Donald Trump might influence oil prices, especially with regard to foreign policy decisions and trade tariffs that could impact global energy markets.

According to Tamas Varga, an analyst at brokerage PVM, there is uncertainty in the oil market as traders are unsure of the next move. This indecisiveness is a result of the competing forces of future oversupply concerns and tightness in the immediate supply of oil. The market is in a holding pattern, waiting for signals from OPEC+ and the global political landscape to provide further clarity.