KEY POINTS:
- Oil prices fell following the capture of Venezuelan President Maduro by US forces
- Venezuelan interim President offers to collaborate with the US following threats of further strikes
- White House told US companies they must rebuild Venezuela's crude-pumping infrastructure
- OPEC+ keeps output steady through Q1 2026
- Bearish positioning very stretched, what could flip the outlook?
FUNDAMENTAL OVERVIEW
Crude oil has been trading on the weaker side today following the regime change in Venezuela after the US captured President Maduro. Trump also stated that the US will run Venezuela in the meantime and the interim President offered to collaborate with the US following the threats of further strikes.
Moreover, according to Politico, the White House has told companies they must rebuild Venezuela's crude-pumping infrastructure if they want compensation for assets seized by Caracas. This adds bearish pressure on oil prices in the medium to long term with higher supply expected in the next years.
We had also the OPEC+ meeting over the weekend, but that went as expected with the cartel maintaining output steady throughout Q1 2026. We might see them cutting output in case prices fall sustainably below the 55.00 level.
On the demand side, despite global monetary easing and improving economic conditions, the oil market remained weak, potentially due to output hikes from OPEC+. The bearish positioning is very stretched, so we might see some life in the market this year if economic activity strengthens further and OPEC+ keeps output steady.
CRUDE OIL TECHNICAL ANALYSIS – DAILY TIMEFRAME
On the daily chart, we can see that crude oil has been slowly trending lower in the second half of last year. Prices fell to a new multi-year low in December before recovering into 2026. We can see that we have a major downward trendline defining the bearish momentum.
If we get a pullback into the trendline, we can expect the sellers to lean on it with a defined risk above it to position for a drop into new cycle lows. The buyers, on the other hand, will want to see the price breaking higher to pile in for a rally into the 62.00 level next.
CRUDE OIL TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME
On the 4 hour chart, we can see that we have a minor downward trendline defining the recent bearish momentum. The sellers will likely continue to lean on the trendline with a defined risk above it to keep pushing into new lows, while the buyers will look for a break higher to pile in for a rally into the major trendline around the 59.00 level.
CRUDE OIL TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME
On the 1 hour chart, we can see more clearly the recent price action with the weakness today caused by the regime change in Venezuela after the US captured Maduro. From a risk management perspective, the sellers will have a better risk to reward setup around the trendline to position for a drop into new lows, while the buyers will need the price to break higher to open the door for a move into the next major trendline. The red lines define the average daily range for today.
UPCOMING CATALYSTS
Today we get the US ISM Manufacturing PMI. On Wednesday, we have the US ADP, the US ISM Services PMI and the US Job Openings data. On Thursday, we get the latest US Jobless Claims figures. On Friday, we conclude the week with the US NFP report.
