WTI Crude rallies despite Chevron's return to Venezuela shifting supply outlook

• WTI Crude Oil rallies with technicals hinting at a potential breakout as consolidation builds.
• Oil whipsaws as easing trade tensions raise the demand outlook.
• US President Donald Trump reinstates Chevron's license to operate in Venezuela.

West Texas Intermediate (WTI) is attempting a breakout as traders weigh conflicting signals from supply and demand. 

At the time of writing, WTI is trading near $66.00, with the gains nearing 1%.

Easing trade tensions and improving demand expectations have been offset by increasing OPEC+ output and news that the Trump administration has reinstated Chevron's license to produce oil in Venezuela.

A Wall Street Journal article published Thursday reported that the Trump administration has reinstated Chevron's license to pump oil in Venezuela. 

This reverses a revocation from earlier this year. The move follows a prisoner exchange in which Venezuela released 10 detained Americans last Friday.

Chevron's reauthorization marks a significant policy shift and potentially opens the door for increased Oil exports from the South American nation despite years of heavy US sanctions.

The Biden administration had previously allowed Chevron to engage in limited operations in Venezuela under strict conditions. That license was rescinded earlier in the year under President Trump's return to office. 

The new authorization paves the way for Chevron to resume pumping crude in the country, which holds the world's largest proven Oil reserves.

While underlying global demand faces headwinds from trade tensions, the critical new factor on the supply side is the US policy shift.

This development, viewed as a potential move to increase supply and manage geopolitical influence, is likely contributing to the current indecision in the WTI market and could cap upside potential as traders factor in the prospect of more crude flowing from Venezuela.

WTI Crude Oil holds a tight range as technicals hint at a potential breakout

From a technical perspective, WTI Crude remains confined within a narrowing range despite efforts from bulls to push through the $66.00 range. The recent move has allowed the price to recover above the 50-day Simple Moving Average (SMA) support level at 65.38, and the 100-day SMA is providing support at 64.62.

On the upside, a move above the $66.00 psychological level a break of the 50% Fibonacci level of the January-April decline near $67.00 could open the door for the 200-day SMA at 67.76.

In contrast, if bears gain traction below the 100-day SMA and break the 38.2% Fibo level of $64.18, this could drive prices back toward the $62.00 mark, last tested in June.

The Relative Strength Index (RSI) is holding near 50, reflecting a neutral momentum backdrop and reinforcing the current market indecision. For now, WTI is in a holding pattern, with traders watching closely for a decisive move that could define the next directional trend.