WTI is currently facing strong selling pressure due to Trump’s announcement about Venezuela’s oil plan, which has raised hopes for a better global supply. The price, which peaked at $58.70 recently, has fallen to around $55.70 during the Asian session, marking its lowest point since December 19. Trump mentioned the possibility of Venezuela exporting 30 to 50 million barrels of high-quality oil to the US, boosting expectations for increased global oil supply. Delcy Rodriguez, Venezuela’s interim President, has also shown a willingness to work with the US, further fostering optimism in the market about rising supply.

Oil Supply Concerns

Despite worries about possible supply disruptions due to political issues between Saudi Arabia and the UAE, a surprise decline in US crude supplies did not lift prices. The API reported a drop of 2.8 million barrels, and traders are now awaiting the official inventory report for more guidance. Traders will closely watch upcoming US economic data, such as the ADP employment report and ISM Services PMI, for insights into market trends. Additionally, expectations of a weaker dollar due to a dovish Federal Reserve could support crude oil prices, as a lower dollar may increase demand for oil priced in USD. We see a pattern in WTI similar to what occurred in early 2025, when news about Venezuelan oil led to a sharp sell-off below the mid-$56.00 range. This shows how quickly new supply perceptions can dominate the market’s focus. This history serves as an important reminder for today’s market conditions. This week, US crude inventories experienced an unexpected increase, with the latest EIA report showing 2.5 million barrels added, contrary to predictions of a decline. This situation echoes the 2025 scenario, where unforeseen supply changes dampened bullish sentiment. Stable US production, which hit a record of 13.3 million barrels per day in late 2025, along with OPEC+ cuts, is keeping the market well-supplied.

Demand and Price Vulnerability

Adding to the downward pressure are ongoing worries about global fuel demand. The World Bank has recently lowered its 2026 global growth forecast to 2.7%, reflecting concerns about weak demand similar to those seen in 2025. This combination of ample supply and declining demand makes crude prices especially vulnerable to further decreases. In the upcoming weeks, traders may want to consider buying put options to protect against a possible price drop. If WTI crude falls below the key level of $70.00 a barrel, we could see a swift decline. Puts with strike prices around $68 or $67 could provide effective and affordable protection against downside risk. Another strategy worth looking into is setting up bear put spreads to reduce entry costs. This involves buying a put option at a higher price and selling one at a lower price simultaneously. This tactic is sensible for traders who anticipate a downturn but think its extent may be limited. It is essential to monitor the weekly inventory reports and any demand changes from major economies like China. In 2025, the market showed a tendency to react strongly to new supply information. Therefore, a decisive break of key support levels should signal potential further weakness. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now