WTI Crude Oil Drops Below $70 – Will Supply Cuts Trigger a Price Reversal?

WTI Crude Oil Falls Below $70 – Is This a Buying Opportunity or the Start of a Deeper Decline?

Oil Market Faces Pressure as WTI Dips Below $70

The crude oil market has been thrown into turbulence as WTI crude oil (CL=F) dropped below $70 per barrel, while Brent crude (BZ=F) hovered around $73.39. The downturn came amid rising global supply concerns, particularly after Donald Trump revoked Chevron’s license to operate in Venezuela, effectively cutting off 240,000 barrels per day from the market. This sudden disruption in Venezuelan output has led to speculation on whether OPEC+ will adjust production in response.

Despite this geopolitical uncertainty, oil prices remain under pressure due to rising U.S. crude inventories, aggressive drilling efforts in the U.S., and softer global demand expectations. However, the question remains—is crude oil poised for a rebound, or are we witnessing the beginning of a sustained decline?

Trump’s Chevron Ban Shakes Oil Supply Outlook

One of the biggest shocks to the oil market came from Trump’s decision to terminate Chevron’s oil operations in Venezuela, a move that immediately impacted global crude supply projections. Venezuela’s crude production has already been struggling, and the loss of over 240,000 barrels per day of exports to U.S. refiners has raised alarms about potential supply shortages in the Americas.

Oil traders reacted swiftly, pushing Brent crude up to $73.39 and WTI crude to $69.40 as markets assessed the implications of Chevron’s forced departure. Analysts at TD Cowen noted that “Chevron’s exit could reduce Venezuela’s production, potentially giving OPEC+ room to increase output.” However, with U.S. oil production remaining strong, the supply loss from Venezuela may not be enough to trigger a sustained price rally.

Adding to the complexity, Venezuela's Vice President Delcy Rodríguez criticized the move as a “damaging and inexplicable decision,” warning that it could worsen migration pressures and destabilize the country’s already fragile economy. On the other hand, U.S. officials, including Secretary of State Marco Rubio, signaled plans to terminate all Biden-era oil and gas licenses that were seen as supporting the Maduro regime, further tightening Venezuela’s ability to participate in global oil markets.

U.S. Crude Inventories Surge, Keeping Oil Prices Depressed

While supply disruptions in Venezuela could have been bullish for oil, rising U.S. crude oil inventories have added significant downward pressure on WTI prices. According to the latest EIA (Energy Information Administration) report, U.S. crude stockpiles increased by 4.6 million barrels last week, far exceeding market expectations.

Additionally, U.S. crude production remains near record highs at 13.3 million barrels per day, keeping global markets well-supplied. With strong domestic production and slowing demand growth in key markets like China, traders have remained cautious about betting on a sustained crude oil rally.

This supply-demand dynamic is clearly reflected in WTI crude's inability to hold above $70 per barrel, with traders selling into any short-term rallies. The market now faces a battle between supply fears related to geopolitical risks and the reality of strong production and rising inventories.

OPEC+ Meeting Looms: Will Production Cuts Continue?

Another key factor influencing oil prices in the coming weeks will be OPEC+’s production strategy. The cartel has been actively managing output to support prices, but with demand concerns rising and WTI struggling below $70, the pressure is mounting for OPEC+ to extend or even deepen production cuts.

So far, Saudi Arabia and Russia have been leading the charge on supply reductions, but recent data suggests that non-OPEC producers, particularly the U.S., Canada, and Brazil, are offsetting much of these cuts. This has left oil markets range-bound, with traders hesitant to push prices too high given the strong supply outlook.

If OPEC+ signals further production cuts at its upcoming meetings, oil prices could find support. However, if the cartel takes a wait-and-see approach, WTI crude could remain stuck below $70, or even slide toward the $67-$68 range in the coming weeks.

Technical Analysis: WTI Crude Oil Faces Resistance at $70.50

From a technical perspective, WTI crude oil has been in a clear downtrend, with multiple failed attempts to break above key resistance levels. Last week, WTI briefly touched $71.17, but strong selling pressure pushed it back down toward the $69.00-$69.40 range.

Key support levels to watch:

• $68.50: A break below this level could signal further downside toward $67.00
• $69.00-$69.40: This range has acted as a short-term support zone, but a failure to hold could trigger deeper declines
• $70.50-$71.00: A key resistance zone that needs to be broken for bullish momentum to return

The Relative Strength Index (RSI) is hovering around 42, suggesting that oil is not yet in oversold territory, leaving room for further declines if selling pressure continues.

Where Is Oil Headed Next? Buy, Sell, or Hold?

With WTI crude struggling below $70, traders are now faced with a critical decision—is this a buying opportunity, or is oil set for deeper declines?

Bullish factors:

• Geopolitical risks from Venezuela and Middle East tensions could disrupt supply
• Potential OPEC+ intervention if prices remain weak
• Seasonal demand pickup as we approach summer driving season

Bearish factors:

• Rising U.S. crude inventories keeping a lid on prices
• Strong U.S. oil production, offsetting OPEC+ cuts
• Slowing global demand growth, particularly in China

Given these dynamics, WTI crude oil remains in a neutral-to-bearish setup, with $69.00-$69.40 acting as a key pivot zone. If crude oil can hold above these levels and break back above $70.50, we could see a push toward $72-$73 in the short term. However, a break below $68.50 would open the door for further downside toward $67 or even $65.

For now, WTI crude oil is a cautious HOLD, with a wait-and-see approach until more clarity emerges on OPEC+ actions and U.S. production trends. Traders should watch key support and resistance levels closely while monitoring supply-side developments in Venezuela, Russia, and OPEC+.

With uncertainty dominating the oil markets, the next few weeks could be highly volatile—will WTI crude oil find support, or is a further drop inevitable?

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