WTI encounters resistance close to the 50-day SMA and drops below the $58.00 mark

WTI Crude Oil Faces Renewed Selling Pressure

During Friday's Asian trading hours, West Texas Intermediate (WTI) US crude oil prices experienced renewed downward momentum, giving back a portion of Thursday’s significant rebound from the lowest levels seen since December 19. Currently, WTI is trading just under $58.00, reflecting a decline of more than 0.80% for the session, and continues to struggle beneath the critical resistance of the 50-day Simple Moving Average (SMA).

On Wednesday, oil prices surged after official US data revealed a larger-than-anticipated drawdown in crude inventories, with stockpiles falling by 3.8 million barrels for the week ending January 2—the biggest drop since late October. This, combined with escalating geopolitical tensions and concerns over potential supply disruptions, triggered a wave of short-covering in the oil market. However, the rally has since lost steam, as expectations grow that increased US involvement in Venezuela’s oil sector could boost global supply.

According to a Wall Street Journal report, President Donald Trump is preparing a long-term strategy to oversee Venezuela’s oil industry, aiming to help achieve a $50 per barrel price target. The report also noted that the administration is considering taking control of Venezuela’s state-owned oil company, Petróleos de Venezuela SA (PdVSA). Earlier this week, Trump stated that Venezuela would transfer between 30 million and 50 million barrels of high-grade, sanctioned oil to the United States.

Additionally, concerns about slowing fuel consumption and the US Dollar’s recent climb to its highest level in nearly a month—reached on Thursday—have prevented oil prices from extending Wednesday’s gains. Market participants are now awaiting the US Nonfarm Payrolls (NFP) report for further insight into the Federal Reserve’s potential interest rate decisions. The results of this report are expected to significantly influence short-term US Dollar movements and, in turn, impact the pricing of commodities like crude oil.