Key Points:
- WTI trades near $56.05, up 1.0% intraday but still near multi-year lows
- Brent crude edges up 0.75% to $60.12, as traders reassess supply risks
- Market shrugs off U.S.-Venezuela tensions, focus shifts to supply fundamentals
Oil prices attempted a modest rebound on Thursday, with front-month WTI crude up 1% to $56.49 per barrel, yet broader market sentiment remains decisively bearish.
The daily chart shows WTI hovering near its lowest levels since 2021, with technical indicators suggesting continued weakness.
According to our research desk, the oil market is likely to remain oversupplied through next year.
While the U.S. has intensified sanctions-related pressure on Venezuela, the impact on global supply is expected to be limited.
Surplus Fears Overpower Supply Risks
Traders remain focused on weak refinery demand in Asia and resurgent production from OPEC+ members, which continue to weigh on prices.
The Fed’s dovish tilt this month has supported risk sentiment but failed to meaningfully lift oil, underscoring the market’s fixation on fundamentals rather than monetary tailwinds.
With global inventories well above five-year averages and slowing consumption forecasts from both the IEA and OPEC, analysts expect crude to remain rangebound — stabilising around the mid-to-high $50s through the first half of 2026.
Technical Analysis
WTI crude remains under pressure, trading near $56.05, down 1.14% on the day and testing a multi-month support zone. The broader trend has been bearish since peaking at $77.89 in July, with the price consistently failing to reclaim the 30-day moving average.
Recent candles show increased downside momentum as sellers gain control, dragging price action further below all short-term MAs (5, 10, 30), a clear sign of weakness.
The MACD indicator confirms the bearish bias, with both signal and MACD lines moving further into negative territory.
While a short-term bounce could occur near this support level, momentum and trend indicators suggest further downside risk unless supply disruptions or OPEC+ commentary offer fresh catalysts.
If support at $56.00 breaks decisively, next targets may lie closer to the $53–$50 region. Bulls remain sidelined for now, with a confirmed break above $60 needed to challenge the prevailing downtrend.
Bottom Line
While short-covering may support temporary rallies, the broader picture points to structural weakness in the oil market.
Unless demand indicators improve or OPEC+ signals coordinated cuts, prices are likely to remain anchored below $60 well into 2026.
