WTI prices slipped as Venezuela resumed oil exports following a period of production cuts due to a US embargo. Two supertankers left Venezuela with approximately 1.8 million barrels each under a US supply agreement, indicating a return of supply to global markets.
The American Petroleum Institute reported a rise in US crude oil inventories by 5.27 million barrels for the week ending January 9. The Energy Information Administration will release its own inventory data, while a Reuters poll suggested a possible decline in US crude stockpiles, alongside an expected rise in gasoline and distillate inventories.
Oil Prices Near Three Month High
Oil prices remained close to a three-month high, partly due to supply risks from protests in Iran. Indian Oil Corporation diversified its oil sources, purchasing Ecuador’s Oriente crude as US and EU sanctions on Russian oil impact supplies.
WTI Oil refers to a high-quality crude from the US, known for its low sulfur content. Prices are driven by supply-demand dynamics, political factors, and OPEC’s production decisions. Inventory reports from API and EIA influence prices by indicating supply levels, with EIA data being deemed more reliable due to its government affiliation. OPEC’s production quotas can also significantly impact prices.
We are seeing the follow-through from events that began unfolding around this time last year. Back in January 2025, the market was absorbing news of Venezuelan exports resuming and a surprise build in US crude inventories. These early signs of increased supply are now more established trends that weigh on the market.
That 5.27 million barrel inventory build reported in early 2025 was significant, and the trend of ample supply has broadly continued. The latest EIA report for the week ending January 9, 2026, showed another build of 2.1 million barrels, reinforcing the pattern. Venezuelan supply has also become a consistent factor, with their output now steadily holding above 1.1 million barrels per day, a substantial increase over the last twelve months.
Changing Geopolitical Risks
The key difference between now and then is the evaporation of the geopolitical risk premium that was holding prices up. The severe protests in Iran, which threatened its oil output in early 2025, have since de-escalated and are no longer a primary market concern. This has left crude prices more exposed to the softer fundamentals of growing global supply.
Given these supply-side pressures, the path of least resistance appears to be downwards. We should consider establishing short positions or buying put options targeting levels below $70 in the coming weeks. Bear put spreads could offer a cost-effective way to position for a moderate decline while limiting risk.
