OIL PRICES REMAIN UNDER PRESSURE FROM GLOBAL OVERSUPPLY DESPITE VENEZUELA TENSIONS

GLOBAL OIL PRICES HAVE STARTED 2026 TRADING WITHIN A NARROW RANGE, WITH WTI HOLDING NEAR THE $58 PER BARREL LEVEL AND BRENT TRADING AROUND $61 TO $62. THE PRICE ACTION REFLECTS A MARKET THAT REMAINS STRUCTURALLY OVERSUPPLIED, LIMITING THE IMPACT OF EVEN HIGH PROFILE GEOPOLITICAL EVENTS SUCH AS THE U.S. OPERATION IN VENEZUELA AND THE CAPTURE OF NICOLÁS MADURO.

AFTER A YEAR IN WHICH CRUDE PRICES FELL BY AROUND 20%, THE MARKET CONTINUES TO ABSORB A PROLONGED WAVE OF NEW SUPPLY. EVEN WITH OPEC+ SIGNALING A MORE CAUTIOUS APPROACH TO ADDITIONAL OUTPUT IN THE NEAR TERM, CURRENT PRODUCTION LEVELS REMAIN HIGH ENOUGH TO KEEP THE GLOBAL BALANCE IN SURPLUS AND TO CAP ANY SUSTAINABLE PRICE RECOVERY.

FROM A TECHNICAL PERSPECTIVE, WTI CONTINUES TO FACE STRONG RESISTANCE IN THE $60 TO $62 ZONE, WHILE BRENT STRUGGLES TO CLEAR THE $64 TO $65 RANGE. RALLIES INTO THESE AREAS HAVE CONSISTENTLY MET SELLING INTEREST, SUGGESTING THAT UPSIDE MOVES ARE MORE LIKELY TO FADE THAN TO DEVELOP INTO A NEW BULLISH CYCLE. ON THE DOWNSIDE, KEY SUPPORT LEVELS ARE BEING WATCHED NEAR $58 FOR BRENT AND IN THE LOW $50S OVER THE MEDIUM TERM.

FUNDAMENTAL FORECASTS FROM MAJOR FINANCIAL INSTITUTIONS AND ENERGY AGENCIES POINT TO LOWER AVERAGE PRICES THROUGHOUT 2026. CONSENSUS EXPECTATIONS PLACE WTI IN THE $50 TO $53 RANGE AND BRENT NEAR $55, BASED ON A PROJECTED GLOBAL SURPLUS OF AROUND TWO MILLION BARRELS PER DAY AND CONTINUED INVENTORY BUILDS.

REGARDING VENEZUELA, MARKET EXPECTATIONS REMAIN MUTED. DESPITE THE COUNTRY’S VAST OIL RESERVES, YEARS OF UNDERINVESTMENT, INFRASTRUCTURE DETERIORATION AND ONGOING SANCTIONS MEAN THAT ANY MEANINGFUL INCREASE IN OUTPUT IS UNLIKELY TO MATERIALIZE IN THE SHORT TERM. AS A RESULT, DEVELOPMENTS IN VENEZUELA ARE BEING VIEWED AS A LONGER TERM STORY RATHER THAN A NEAR TERM SUPPLY SHOCK.

OVERALL, THE OIL MARKET CONTINUES TO OPERATE WITH A DEFENSIVE BIAS, WHERE PRICE STRENGTH IS GENERALLY SEEN AS AN OPPORTUNITY TO SELL RATHER THAN A SIGNAL OF A TREND REVERSAL. UNLESS THERE IS A CLEAR AND SUSTAINED IMPROVEMENT IN GLOBAL DEMAND OR A SHARPER CONSTRAINT ON SUPPLY, THE DOMINANT OUTLOOK FOR 2026 REMAINS ONE OF RANGE BOUND TO MODESTLY LOWER PRICES.