The WTI crude oil price is showing signs of bottoming after hitting a key support level at $55.40. It has plunged by over 25% from its highest level in 2025 and is hovering near its lowest level in years.
WTI Crude Oil to React Mildly to Venezuela Crisis
Crude oil prices will be in the spotlight on Monday as the market comes to terms with the recent developments in Venezuela, where Donald Trump staged a major attack and arrested the country's president.
In his press conference, Trump insisted that the United States will now be in charge of the country, with its large energy companies investing billions of dollars.
In theory, the fall of the Maduro regime should be bearish for oil prices. For one, with the US in control, it means that sanctions will be lifted and that production will be boosted.
However, in reality, Venezuela is still a small player in the oil market, producing less than 1 million barrels of oil a day. Also, American investments will take years to materialize. And worse, regime changes often lead to destabilization of countries and supply.
The other main catalyst for the WTI crude oil price will be the OPEC+ meeting in which officials are expected to stick with their plans to pause supply increases in the first quarter. The cartel increased supply rapidly last year, leading to concerns about oversupply in the market.
Meanwhile, the US will publish the first inventory report on Wednesday. The report by the EIA is expected to show that inventories dropped by over 1 million in the last week of the month.
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Crude Oil Technical Analysis
The weekly chart shows that the WTI crude oil price has been in a strong downward trend in the past few months. It bottomed at $54.40, its lowest level in April and December last year.
Oil has formed a double-bottom pattern, which is made up of two lower swings and a a neckline, which is at $77.32.
However, technical indicators suggest that oil may continue falling in the near term. For one, the price remains below the 50-week and 100-week Exponential Moving Averages (EMA). The MACD and the Relative Strength Index (RSI) have continued falling in the past few weeks.
Therefore, the most likely oil forecast is neutral with a bullish bias. The bullish outlook will remain as long as it is above the double-bottom pattern point at $55.39. A drop below that level will point to more downside, potentially to $50.
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