Trading WTI Following the Weekend Geopolitical Events
Movement relatively contained considering the fundamental update with the technical bias still negative, while in sentiment both CoT speculators and clients are extreme buy.
It has been a busy weekend for oil traders digesting the latest updates, as initially they had expected the attention to be on Sunday’s OPEC+ meeting where they opted to hold on output for the first quarter of this year as expected. Instead, it was about the events on the geopolitical front in Venezuela, where the U.S. attacked and toppled its leader, with President Trump saying they’re “in charge” of the country, they’ll “get the oil flowing the way it should be” and demanding “total access” to its energy infrastructure.
Actions like these in an oil-rich country usually send WTI a bit higher, but not at a time when the market is expecting ample supply and more so if expectations are for an increase in long-term oil production. The result has been relatively contained movement for the energy commodity’s price and moving into the $56 handle on Capital.com’s platform, with the beneficiary seen in precious metals where gold breached $4,400 (even as the dollar outperforms in the FX market) thanks to safe-haven demand where further action on Venezuela hasn’t been ruled out and even the possibility of Colombia and Mexico.
In terms of U.S. economic data, we got manufacturing PMI (Purchasing Managers’ Index) out of S&P Global for the month of December at an expansionary 51.8 in line with forecasts, but expectations are for ISM’s (Institute for Supply Management) figure to remain in contracting territory when it releases later today.
ISM’s services PMI will be on Wednesday, but the attention will tilt towards labor data as the week progresses with ADP’s non-farm estimate on Wednesday and so too job openings out of JOLTS, the weekly claims and Challenger’s job cuts on Thursday, and leading up to the market-moving Non-Farm Payrolls on Friday where a meagre 57K of growth is expected for the month of December and will likely shift Federal Reserve (Fed) rate cut odds as policymakers note the weakening labor market.
Speaking of the Fed, a few of its FOMC (Federal Open Market Committee) members are expected to speak this week, and we already heard from Paulson that monetary policy remains modestly restrictive with progress on inflation likely to continue, and requiring more clarity on employment.
For more direct data from the oil industry, there’s the weekly inventory prints out of API on Tuesday, the more encompassing figures out of EIA on Wednesday, and rig count readings out of Baker Hughes on Friday.
WTI’s technical overview, strategies and levels
Looking at the daily time frame and price is below all its main moving averages (MA), on the DMI (Directional Movement Index) front the -DI below the +DI to label it as negative, an RSI (Relative Strength Index) below the middle but well above oversold levels, and an ADX (Average Directional Movement Index) that by one calculation has reached trending territory but not yet by another. That makes the technical overview a tricky one on the short-term daily time frame, no denying its negative technical bias but where moving opposite the 1st levels ideally done only after a significant reversal to avoid getting stopped out on the first initial volatile move, and especially at a time when traders will be reacting to fundamental news even if the initial impact might not be as large as expected.
Zooming out to the weekly time frame and it has been suffering from negative technical bias as well, with a wide bear channel keeping the overview not far off from tilting to ‘bear average’ but otherwise ‘consolidation – negative bias’ where moves to the larger and longer-term weekly 1st levels have a better chance of holding compared to the narrower daily ones. From a strategic standpoint, should prices remain relatively controlled and that means breakout strategies will be for contrarians who see a shake out to a new zone, and leaving fading/reversal strategies for conformists expecting the status quo.
Capital.com’s client sentiment for WTI
Client sentiment was and remains in extreme buy territory for ‘Crude Oil’ on Capital.com’s trading platform, as any further price declines has resulted in shorts being closed out while longs keep holding on, and where any drop that occurs in a controlled manner keeping range-traders hopeful of a lift off the lows that they can take advantage of.
Looking at CoT (Commitment of Traders) speculators according to the latest report out of the CFTC and they too are in extreme buy territory rising from 78% to 80%, in what has been a slow and steady climb in net long bias over the past few months from moderate long bias to extreme buy advancing closer to the percentage level of retail traders. Keep in mind CoT data is delayed meaning we’ll have to wait until Friday’s report to see how they reacted to the latest geopolitical event.
Client sentiment mapped on the daily chart
Source: Capital.com
Period: NOVEMBER 2025 – JANUARY 2025
Past performance is not an indicator of future results.
WTI’s chart on Capital.com’s platform with key technical indicators
Source: Capital.com
Period: AUGUST 2025 – JANUARY 2025
Past performance is not an indicator of future results.