Oil Falls Again, Is the Market Starting to "Insist" on Seeing the $50s?
Brent and WTI oil prices weakened on Friday (December 19th) and headed for a second weekly decline as the market focused more on the risk of oversupply than on potential supply disruptions. As of Friday in Asia, Brent was down around 0.2% to $59.73/barrel and WTI was down 0.2% to $56.02/barrel; on a weekly basis, Brent was down around -2.3% and WTI -2.5%.
Today's Fundamentals
Bearish sentiment stems from the belief of many market participants that global supply will be excessive early next year, while demand is not yet considered strong enough to absorb the additional supply. Furthermore, hopes for Russia-Ukraine peace negotiations have also reduced the "risk premium," which typically supports prices when there is a threat of supply disruptions.
However, geopolitical concerns remain. The US is pressuring Venezuela through a blockade of sanctioned tankers, but how this will be implemented remains unclear. At the same time, Venezuelan exports continue, including shipments to China. This situation has led the market to hold back from overreacting—the risk is there, but the direct impact has yet to be "quantified."
From Europe, the UK is also adding geopolitical factors with sanctions on smaller Russian oil producers. However, the market believes that without a major escalation that significantly reduces Russian oil flows, the oversupply theme remains dominant.
Today's Technicals (Key Levels Traders Watch)
For Brent, the $60 area is an important psychological resistance—as long as it fails to break through and hold above it, the price is likely to easily "bounce." Nearest support is around $59, then around $58 if selling pressure increases.
For WTI, the market is closely watching two levels: $56.70 as a trigger for a rebound (a breakout would ease short-term downward pressure) and $54.98 as critical support (a break would open the risk of a fall to the $50 area again). It's worth noting that the January WTI contract expires today, so movement could be noisier due to the rollover to the February contract.
Today's Closing Area Prediction
With pre-holiday conditions typically thinning volume, the most plausible scenario is for a close to remain below key areas:
Brent: potential close at $59.20 – $60.10
WTI: potential close at $55.40 – $56.40
If a geopolitical headline seriously threatens supply, Brent could test $60+ and WTI could test $56.70. Conversely, if oversupply sentiment intensifies, Brent is vulnerable to falling to the $58s and WTI is likely to head towards $55 → $54.98.
Outlook for Next Week (Brent & WTI)
Next week is likely to be more volatile but with thin volume (Christmas–New Year period), allowing prices to move quickly within a range. The primary bias remains sideways-bearish due to the surplus narrative, but there remains a risk of a surge if there is an escalation in Russia/Venezuela tensions. Realistic ranges:
Brent: $57 – $61
WTI: $54 – $58
As long as Brent remains below $60 and WTI below $56.70, the market is likely to view the rally as merely a technical rebound. However, if WTI falls consistently below $54.98, the pressure could intensify, and talk of the psychological target of $50 will intensify.
Source: Newsmaker.id
