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Market Returns to Oversupply Pattern, Decline May Continue
Commodity
Summary:
With the impact of geopolitical factors easing, supply-demand dynamics drive market movements again. Under an oversupplied environment, WTI may continue to weaken.
Sell
TradingWTI
EXP
57.689
Entry Price
52.800
TP
59.100
SL
57.439 -0.414 -0.72%
0
Point
Flat
52.800
TP
CLOSING
57.689
Entry Price
59.100
SL
Fundamentals
The core factor currently influencing oil prices lies in the dual pattern of ample supply and fragile demand. On one hand, global supply remains difficult to tighten quickly, given the resilience of U.S. production and news of overall output increases or maintained production levels from OPEC+. As a result, the market faces persistent downward pressure. Multiple institutions and media outlets note that although prices were temporarily jolted by geopolitical events during the year, oversupply has been the dominant factor overall.
On the other hand, international agencies are not entirely pessimistic about demand: IEA's monthly report revised 2026 demand slightly higher. However, this improvement is insufficient to absorb the current excess capacity immediately. In the short term, it is unlikely to change the fundamental backdrop of "slow inventory digestion."
In addition, positioning on exchanges and microstructure in the futures market have amplified intraday volatility: recent reports show futures positions and trading volumes declining seasonally toward year-end. If technical selling pressure or margin adjustments occur, price pullbacks could be magnified.
Technical Analysis
Based on the daily chart, WTI's trend stays within a descending channel. Recently, price action has repeatedly touched the upper rail of the descending channel but failed to break through effectively, indicating weakening bullish momentum and increasing likelihood of a near-term downtrend.
Currently, key resistance above WTI is around 58.76. If the price can break through and hold above this level in the short term, upside potential will open up, with a possible test of the 60.00 level. The primary support below is near 56.60, and WTI may continue lower to test the 55.00 support and potentially move toward the 50.00 level if this level is breached.
Trading Recommendations
Trading direction: Sell
Entry price: 57.60
Target price: 52.80
Stop loss: 59.10
Valid Until: January 14, 2026, 23:00:00
Support: 55.70/54.75
Resistance: 58.34/58.76
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