Insights 
VT 
Key Points
- Brent slipped 0.05% to $60.80 a barrel, while WTI eased 0.05% to $57.37.
- Brent fell 18% in 2025, marking its sharpest annual loss since 2020.
Oil prices steadied in early trade as markets balanced geopolitical risk against entrenched oversupply. Brent crude hovered near $60.80 a barrel, down 0.05%, while WTI traded around $57.37, also down 0.05%.
Price action stayed close to three-month averages, reflecting a market that struggles to extend rallies after a heavy year of losses.
Trading remained subdued, with participants reluctant to chase moves in either direction.
The prevailing tone suggested consolidation rather than trend change, as macro and supply forces continued to dominate near-term pricing.
Gulf Tensions Add Risk Premium
Geopolitical risk ticked higher amid escalating tensions between Saudi Arabia and the United Arab Emirates.
Their respective proxies clashed in Yemen, following a dispute centred on a strike on a Yemeni port that serves as a gateway to the country’s oil-producing region.
These developments injected a modest risk premium into prices.
However, the impact remained limited as traders judged the situation unlikely to disrupt global supply flows in the near term.
Oversupply Continues to Dominate
The broader supply picture continued to weigh on oil. Persistent gluts pushed prices to their weakest annual performance in several years, with Brent crude falling 18% in 2025.
Elevated production and subdued demand growth have kept inventories comfortable, reducing sensitivity to geopolitical headlines.
This imbalance has blunted upside reactions even when tensions rise, reinforcing the market’s range-bound behaviour.
Technical Analysis
Oil prices remain capped below the $59 resistance, slipping back toward the mid-range after failing to sustain momentum.
The broader structure since August shows a persistent downtrend from the $77.895 high, with price now consolidating between $54.86 and $59. Moving averages remain flat, suggesting a lack of strong directional bias.
MACD lines are converging near the zero line, further reinforcing a neutral-to-bearish tone in the short term.
While a break below $55 would reopen downside risks, upside gains remain limited unless bulls can reclaim the $60 threshold convincingly.
Cautious Outlook Amid Competing Forces
Oil prices may continue to drift as geopolitical risk adds background support but fails to outweigh oversupply. Unless tensions escalate into material supply disruptions or inventories tighten, rallies may remain limited.
In the near term, Brent may oscillate between $59.00 and $62.00, while WTI may trade within a $55.00 to $59.00 range as markets reassess supply and demand dynamics.
