Oil on Discount: WTI Nosedives as Sellers Return to the Market, What's Next?

Author: Elior Manier

Date: 7 January 2026

Market Overview

After an initial rise in WTI oil prices due to the capture of Venezuela's Nicolas Maduro, the market is now experiencing a correction. The initial spike in prices was unexpected, as it seemed counterintuitive to rise on news that could potentially increase supply. This phenomenon is attributed to the "Buy the Rumor, Sell the News" effect.

Supply Dynamics

Sanctioned nations like Russia and Venezuela have been selling oil at significant discounts, sometimes as much as $20 below spot prices, to navigate around restrictions. As these nations regain access to traditional markets, the competitive black market prices diminish, leading to a perception of tightening supply, which has historically influenced oil prices.

The article discusses the "Sanctions Paradox," where countries under sanctions flood the market to sustain their regimes, impacting global oil prices. The recent geopolitical events have led to a temporary volatility premium in oil prices, which is now dissipating.

Current Price Action

The price of WTI oil has seen a swift selloff, with mean-reversion buying observed around the $56.50 support level. The article suggests that if prices break below $55.82, it could indicate further downward momentum. However, structural elements in the market may prevent prices from reaching new lows.

Technical Analysis

The analysis includes key resistance and support levels for WTI oil:

• Resistance Levels:
  • $57 to $58.00 Major Pivot
  • $58.17 4H 200-MA
  • $59 to $60 2021 Resistance and Channel Highs
  • Minor Resistance $62 to $63
  • Key September Resistance $65 to $66
• Support Levels:
  • $56.38 Weekly Open gap down
  • $55.83 Session Lows
  • $55 to $56.50 2025 Support and Channel lows
  • 2019 mini support $53 to $54
  • Mid-2019 Main support $51 to $52.50

Conclusion

The article concludes with a cautious outlook on WTI oil prices, suggesting that while there may be opportunities for buying at support levels, traders should remain vigilant for potential breakouts or breakdowns in price action. The market's response to geopolitical events and supply dynamics will continue to shape the future of oil prices.

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