Crude Oil Futures at Crossroads as Venezuela Production Boosts Inventory
Published: January 08, 2026
Author: James Hyerczyk
Market Overview
Crude oil futures are currently experiencing a period of indecision, trapped within a narrow trading range. This situation indicates a potential for either a breakout above resistance levels or a breakdown below support levels. The market is reacting to various factors, including a recent deal between the U.S. and Venezuela regarding crude oil exports.
Technical Analysis
As of the latest trading session, Light Crude Oil Futures are priced at $56.57, reflecting a slight increase of 1.04%. The technical setup suggests that the market is poised for a significant move, with key levels identified at $56.93 (50% retracement) and $56.47 (61.8% retracement). A sustained move above $56.93 could indicate a return of buyers, while a drop below $56.47 may signal increasing selling pressure.
The 50-day moving average, currently at $58.59, has been a significant resistance level, with multiple failed attempts to rally above it since late October. The prevailing trend remains bearish, characterized by lower highs and lower lows.
Fundamental Factors
Recent developments in Venezuela have added complexity to the market. The U.S. has struck a deal to acquire up to $2 billion worth of Venezuelan crude, which has led Morgan Stanley to predict a surplus of 3 million barrels per day in the first half of 2026. This anticipated surplus, combined with rising U.S. fuel inventories, is exerting downward pressure on prices.
Additionally, reports indicate that U.S. gasoline and distillate stocks have risen more than expected, further complicating the supply landscape. Chevron is reportedly seeking to expand its operations in Venezuela, which could lead to increased exports and further impact U.S. stockpiles.
Outlook
The outlook for crude oil prices remains cautious, with a significant supply glut limiting the potential for a sustainable rally. Unless unforeseen geopolitical events disrupt supply, the market may continue to face downward pressure. A breakdown below $56.47 could lead to further declines, while a breakout above $56.93 could open the door to a rally towards the $60.70 to $62.05 range.