Oil News: Traders Cut Futures Exposure as Supply Glut Clouds Oil Outlook, Analysis Shows

Oil Prices Forecast: Traders Weigh Supply Glut Against Geopolitical Risks

Light crude oil futures edged higher on Friday as traders continued to balance evidence of oversupply and weakening demand against the possibility of disruption tied to sanctions and tanker blockades.

The market attempted to stabilize after Tuesday’s sharp drop to $54.84, followed by a quick rebound to $56.85 that stalled and formed a minor pivot at $55.85.

Prices were also tracking toward a second straight weekly decline, reinforcing concerns that fundamentals remain pressured.

At 12:15 GMT, Light Crude Oil futures are trading $56.22, up $0.22 or +0.39%.

Crude Oil News Today: Supply Glut Expectations Dominate Sentiment

Benchmarks were little changed in early Friday dealings, with Brent and WTI down 2.1% and 2.3% respectively for the week. Traders focused heavily on projections for a global oversupply next year as output from OPEC+, the United States, and other producers increases.

Saxo Bank’s Ole Hansen noted that prices holding near current levels reflect a market “awash with oil,” suggesting that available supply is sufficient to absorb potential disruptions elsewhere.

Are Geopolitical Risks Losing Their Influence on Oil Prices Projections?

The tension surrounding Venezuelan tanker movements—normally a source of upward pressure—offered limited support. Analysts said uncertainty about how the United States will enforce President Donald Trump’s directive to block sanctioned vessels reduced the geopolitical premium.

Venezuela, responsible for roughly 1% of global supply, allowed two unsanctioned cargoes to depart for China this week, softening the perceived threat to exports. At the same time, growing optimism regarding a U.S.-led Ukraine peace initiative further eased supply risk concerns, limiting upside momentum.

Technical Levels Guide Near-Term Trader Behavior

The minor pivot at $55.85 remains a critical reference for short-term direction. A sustained move above this level would signal fresh buying interest, opening the door for a retest of the weekly high at $56.85. Clearing that area could drive prices toward the intermediate pivot at $57.60.

Still, with the main trend down on the swing chart and the 50-day moving average situated at $58.73, sellers are expected to re-emerge if futures push into that zone. Failure to hold $55.85 would expose the market to a return toward this week’s low at $54.84.

Market Forecast: Near-Term Bias Remains Bearish

While geopolitical events offer sporadic support, the broader narrative of expanding supply continues to pressure sentiment. Bank of America analysts noted that lower prices may eventually restrain output, but in the near term the imbalance remains intact.

Unless buying strength holds above the minor pivot, the market is likely to maintain a bearish tone with traders preparing for further weakness.

More Information in our Economic Calendar.