WTI oil prices jumped 4% on Friday before settling down as markets rethink US oversight of Venezuelan oil due to military actions in Caracas. WTI is now trading around $58.00, raising concerns about the possible increase in Venezuela’s oil supply, which could lead to oversupply in the market.

Investment in Venezuelan Oil

US President Donald Trump proposed a $100 billion investment to improve Venezuela’s oil infrastructure. Technical indicators show a short-term boost for WTI, with prices above the 21-day Simple Moving Average and a Relative Strength Index over 50. While there have been short-term gains, the long-term outlook for the market is still not strong. The 50-day Simple Moving Average acts as resistance at $58.34. If this level is broken, there could be further price gains, while the 21-day Simple Moving Average offers support around $57.24. WTI oil prices depend on supply and demand, influenced by geopolitical issues, OPEC decisions, and the value of the US Dollar. Inventory reports, like those from the API and EIA, also affect prices by changing perceptions of demand. OPEC’s production limits impact prices, with adjustments to capacity affecting market supply. These factors contribute to frequent changes in WTI oil prices. As we start 2026, the market dynamics for WTI crude are quite different from 2025. Last year, concerns about Venezuela’s oversupply kept prices around $58. This year, with WTI near $78, the focus has shifted to tight supply in light of renewed tensions in the Strait of Hormuz.

Recent EIA Report

This positive sentiment is backed by recent data. The Energy Information Administration (EIA) report indicated an unexpected inventory drop of 3.1 million barrels, while analysts predicted a small increase. This suggests stronger-than-expected consumer and industrial demand, supporting current price levels. Technically, staying above the 21-day Simple Moving Average, currently near $76.50, is crucial for short-term momentum. A steady breakthrough above the $80 mark could attract more buying in the coming weeks. Traders should keep a close eye on these levels for signs of a continued upward trend or a possible reversal. However, we also need to consider supply factors. US crude production remains high, around a record 13.5 million barrels per day. This large output could limit any significant price increases, keeping the market volatile. In response to global conditions, OPEC+ announced last week that it would maintain its production cuts through the end of the first quarter. This decision reflects the group’s desire for price stability rather than chasing market share at this time. This strategy should help protect derivative traders from major losses, though any unexpected policy changes could still present risks. Create your live VT Markets account and start trading now.

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