Oil News: Crude Oil Futures at Crossroads as Venezuela Production Boosts Inventory

Technical Setup Points to Imminent Breakout or Breakdown

Light crude oil futures are lower on Thursday, but inside yesterday’s range, suggesting investor indecision and impending volatility. Traders have had a lot to deal with this week so the positioning is understandable. Technically, the market is set up for an upside breakout over a 50% level at $56.93 or a breakdown under the 61.8% level at $56.47.

At 10:54 GMT, Light Crude Oil Futures are trading $56.57, up $0.58 or +1.04%.

50-Day Moving Average Controls the Trend

On the upside, clearly the 50-day moving average at $58.59 and the swing chart are controlling the trend. Several failed rallies at the 50-day MA since late October prove this. Additionally, the series of lower tops and lower bottoms, which is the very definition of a downtrend, proves the downtrend. It’s going to take a change in this pattern, supported by strong buying volume to change these patterns and consequently the trend.

Key Range Dictates Near-Term Direction

The short-term range is at the forefront at this time too. It is $54.98 to $58.88. 50% of this range is $56.93 and 61.8% is $56.47. This zone is currently controlling the near-term direction. A sustained move over the upper or 50% level will indicate the return of buyers, while a sustained move under $56.47 will indicate increasing selling pressure.

A breakout over the swing top at $58.88 could trigger a quick move into the retracement zone at $60.70 to $62.05, while a sustained break under this week’s low puts the December 16 bottom at $54.98 at risk.

Venezuela Developments and Inventory Builds Weigh on Prices

Fundamentally, prices have steadied after two days of volatility and weakness as investors continued to assess the impact of developments in Venezuela, while dealing with a large build in U.S. fuel inventories.

Supply concerns remain at the forefront especially since reports of the United States taking control over Venezuela’s oil exports suggested even higher U.S. stockpiles. Increased U.S. refined product inventories also capped gains and weighed on prices, offsetting lower crude stocks. According to the Energy Information Administration (EIA), U.S. gasoline and distillate stocks increased by more than analyst expectations in the week ended January 2.

On Tuesday, the Trump administration announced a deal with the Venezuelan government to obtain up to $2 billion of domestic crude. This news may have prompted analysts at Morgan Stanley to forecast a surplus of as much as 3 million barrels per day in the first half of 2026.

Chevron Seeks Expanded Venezuela License

Domestically, Reuters is reporting that oil producer Chevron is in talks with the U.S. government to expand a key license to operate in Venezuela so it can increase crude exports to its own refineries and sell to other buyers, four sources close to the negotiations said on Wednesday.

In other news, U.S. oil major Exxon Mobil said on Wednesday that lower crude oil prices could cut its fourth-quarter upstream earnings by about $800 million to $1.2 billion.

Outlook: Supply Glut Limits Upside Potential

Looking ahead, with huge supply looming, it’s hard to fathom a sustainable rally at this time, unless it’s tied to an unforeseen geopolitical development that greatly impacts available supply. Nonetheless, the daily chart points towards a potential price surge over $56.93. However, the chart also indicates resistance at the 50-day moving average.

On the downside, the absence of a supply disruption combined with excessive supply points toward lower markets especially if a breakdown under $56.47 leads to a failure at $55.76.

More Information in our Economic Calendar.