KEY POINTS:
- Oil prices fell following the capture of Venezuelan President Maduro by US forces
- Venezuelan interim President offers to collaborate with the US following threats of further strikes
- White House told US companies they must rebuild Venezuela’s crude-pumping infrastructure
- OPEC+ keeps output steady through Q1 2026
- Bearish positioning very stretched, what could flip the outlook?
FUNDAMENTAL
OVERVIEW
Crude oil has been trading
on the weaker side today following the regime change in Venezuela after the US
captured President Maduro. Trump also stated that the US will run Venezuela in
the meantime and the interim President offered to collaborate with the US following
the threats of further strikes.
Moreover, according to Politico,
the White House has told companies they must rebuild Venezuela’s crude-pumping
infrastructure if they want compensation for assets seized by Caracas. This
adds bearish pressure on oil prices in the medium to long term with higher
supply expected in the next years.
We had also the OPEC+
meeting over the weekend, but that went as expected with the cartel
maintaining output steady throughout Q1 2026. We might see them cutting output
in case prices fall sustainably below the 55.00 level.
On the demand side, despite
global monetary easing and improving economic conditions, the oil market remained
weak, potentially due to output hikes from OPEC+. The bearish positioning is
very stretched, so we might see some life in the market this year if economic
activity strengthens further and OPEC+ keeps output steady.
CRUDE OIL
TECHNICAL ANALYSIS – DAILY TIMEFRAME
WTI crude oil – daily
On the daily chart, we can
see that crude oil has been slowly trending lower in the second half of last
year. Prices fell to a new multi-year low in December before recovering into
2026. We can see that we have a major downward trendline defining the bearish
momentum.
If we get a pullback into
the trendline, we can expect the sellers to lean on it with a defined risk
above it to position for a drop into new cycle lows. The buyers, on the other
hand, will want to see the price breaking higher to pile in for a rally into
the 62.00 level next.
CRUDE OIL TECHNICAL
ANALYSIS – 4 HOUR TIMEFRAME
WTI crude oil – 4 hour
On the 4 hour chart, we can
see that we have a minor downward trendline defining the recent bearish momentum.
The sellers will likely continue to lean on the trendline with a defined risk
above it to keep pushing into new lows, while the buyers will look for a break
higher to pile in for a rally into the major trendline around the 59.00 level.
CRUDE OIL TECHNICAL
ANALYSIS – 1 HOUR TIMEFRAME
WTI crude oil – 1 hour
On the 1 hour chart, we can
see more clearly the recent price action with the weakness today caused by the
regime change in Venezuela after the US captured Maduro. From a risk management
perspective, the sellers will have a better risk to reward setup around the
trendline to position for a drop into new lows, while the buyers will need the price
to break higher to open the door for a move into the next major trendline. The
red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US ISM Manufacturing PMI. On Wednesday, we have the US ADP,
the US ISM Services PMI and the US Job Openings data. On Thursday, we get the
latest US Jobless Claims figures. On Friday, we conclude the week with the US
NFP report.
