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.
