Oil and Natural Gas Market Analysis - January 2026
Market Overview
Oil prices have experienced a decline following the announcement that the U.S. plans to import Venezuelan crude oil. This development has raised concerns about oversupply in the market, leading to bearish sentiment among traders. Brent crude oil settled at approximately $60 per barrel, while WTI crude oil closed around $56 per barrel.
Supply Dynamics
The U.S. deal to import between 30 million to 50 million barrels of Venezuelan oil has contributed to expectations of increased supply, which is keeping prices subdued despite ongoing geopolitical tensions. The market is currently focused on supply dynamics, and the influx of Venezuelan oil is expected to limit any near-term price increases.
Inventory Data
Recent U.S. inventory data revealed a larger-than-expected decrease in crude stockpiles, which typically would be bullish for prices. However, mixed signals from gasoline and distillate inventories have tempered any bullish reactions, indicating that the market remains cautious.
Technical Analysis of Crude Oil
The daily chart for WTI crude oil indicates persistent bearish pressure, with prices approaching the lower boundary of long-term support around the $55 mark. The failure to break above the 50-day Simple Moving Average (SMA) suggests a potential for further declines. The Relative Strength Index (RSI) is also showing bearish momentum.
On the 4-hour chart, WTI crude is trapped within a descending broadening wedge pattern, failing to surpass the $59.50 resistance level and moving towards the $55 support area.
Natural Gas Market Analysis
Natural gas prices have rebounded from the $3.30 support level and are currently consolidating around the 200-day SMA. A breakout above $3.70 could signal further upside potential towards $3.85. However, if prices remain below $4.50, a decline towards $2.60 is possible.
The 4-hour chart shows a rebound from the $3.20 to $3.30 support area, with immediate resistance at $3.85. A drop below $3.20 could lead to further declines.
US Dollar Analysis
The US Dollar Index has rebounded from the 97.50 support level, showing uncertainty below the 200-day SMA. A break above 99 could indicate further upside towards 100.50, while a drop below 96.50 would suggest continued bearish pressure.