WTI rebounds from two-week lows amid Venezuela turmoil, upside capped below $60
- WTI rebounds from over two-week lows amid geopolitical uncertainty surrounding Venezuela.
- US intervention adds uncertainty, but sanctions and weak infrastructure limit near-term supply risks.
- The technical outlook remains fragile as momentum indicators stabilise, though the broader trend stays weak below $60.
West Texas Intermediate (WTI) Crude Oil rebounds sharply on Monday, reversing earlier losses as traders assess the implications of the United States’ dramatic move against Venezuela following weekend military strikes that led to the ousting of President Nicolas Maduro.
At the time of writing, WTI trades around $58.00 per barrel, recovering after slipping to over two-week lows near $56.19 earlier in the European session.
Venezuela holds the world’s largest proven Crude Oil reserves, estimated at around 303 billion barrels, according to the US Energy Information Administration (EIA). Despite the massive reserves, the country exports far less Oil than other major reserve holders such as Saudi Arabia, Russia, Iran, or Canada.
Following the attacks, US President Donald Trump said on Saturday that Venezuela’s oil sector had been “a total bust for a long period of time,” adding: “The oil business in Venezuela has been a total bust for a long period of time… we are going to have our very large US oil companies — spend billions of dollars — and start making money for the country.” However, Trump also stressed that sanctions on Venezuelan crude would remain in place.
The remarks added to concerns about an already oversupplied market. That said, US intervention in Venezuela is unlikely to translate into an immediate boost in crude Oil supply as the country’s Oil infrastructure remains far below optimal levels, making any meaningful production recovery a costly and long-term effort.
From a technical standpoint, the daily chart suggests a modest rebound in WTI, with prices moving back above the 21-day Simple Moving Average (SMA) near $57.52. On the upside, gains may remain limited, as the 50-day SMA around $58.68 stands as immediate resistance.
A stronger barrier is seen near the $60 psychological level, where the 100-day SMA sits around $60.34. Without a clear break above $60, the broader downside risk is likely to remain in place.
Momentum indicators paint a cautious but stabilising picture. The Relative Strength Index (RSI) is hovering near the 50 level, suggesting neutral momentum after sliding towards oversold territory. Meanwhile, the Average Directional Index (ADX) remains subdued, sitting around the low-20s, indicating that the broader trend lacks strength.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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