WTI Crude Oil falls below $65 amid rising output and cloudy demand signals

• West Texas Intermediate declines as Venezuela and OPEC+ increase concerns about oversupply.
• Clarity on US-EU and US-China trade talks may guide the direction of WTI.
• WTI Crude Oil drops below $65.00 as technical pressure aligns with rising supply outlook.

West Texas Intermediate (WTI) is under pressure on Friday as markets respond to a growing global supply outlook and remain cautious on demand prospects.

At the time of writing, WTI is trading below $65.00, with daily losses exceeding 1.50%.

The market is reacting to the prospect that Venezuela could resume Oil exports, following the US decision to reinstate Chevron's license to operate in the country. 

The move came after a high-profile prisoner exchange that led to the release of ten American hostages. Under the revised authorization, Chevron may conduct restricted oil-for-debt transactions and resume contractor payments, without enabling direct financial benefit to the Maduro regime.

While immediate production gains are expected to be limited due to Venezuela's weakened infrastructure, the move reopens the door to significant long-term supply potential. Venezuela holds the world's largest proven Crude reserves, and even a partial recovery could impact global supply dynamics.

Optimism surrounding the ongoing US-EU and US-China trade talks has helped lift broader risk sentiment. But until clarity emerges regarding the negotiations, WTI gains are likely to remain limited.

Meanwhile, the Organization of the Petroleum Exporting Countries and its allies (OPEC+) is set to increase output by 548,000 barrels per day (bpd) in August. 

A follow-up meeting on August 3 is expected to confirm a similar increase for September.

The combination of rising OPEC+ output and the potential return of Venezuelan supply is fueling concerns about oversupply.

These supply-side risks currently outweigh supportive factors, such as improving demand indicators, stronger macroeconomic data, and easing trade tensions.

WTI Crude Oil drops below $65.00 as technical pressure aligns with rising supply outlook

WTI crude is trading below $65, reinforcing the bearish tone as fundamentals and technicals move in tandem.

The price has slipped decisively below the 50-day Simple Moving Average (SMA) at $65.44. It is now pressuring key support at the 100-day SMA ($64.61) and the 38.2% Fibonacci retracement at $64.18.

This zone of confluency is critical. Failure to hold above this area would expose the June low at $63.73, with a clean break targeting the next major 23.6% Fibo level at $60.58.

WTI Crude Oil daily chart

On the upside, resistance remains at the 50-day SMA, followed by $66.75 and the 50% retracement at $67.08.

The Relative Strength Index (RSI) at 46 signals weakening momentum, supporting the view that downside risks remain in focus as supply concerns weigh on sentiment.