WTI Oil prices at 2025 Lows – Opportunity or Trap?

Ben Graham · 2 horas atrás

Oil prices have been tumbling without stopping in a stable but continuous downtrend.

A positive development that encourages cuts by reducing inflation expectations for consumers, but with prices back to January 2021 levels, producers are pressured to decrease investment in technology and rig development.

For example, US Shale is known to be profitable at around $70 per barrel.

As pressure mounts, producers can be squeezed out of the Market, which can then result in a too-short supply in the future, potentially raising future prices in the energy commodity.

oil — Falling Inventories and Falling Oil Prices – Source: LSEG, published by Ian Harnett

Following a mid-October trough, better-looking Chinese demand led to a rebound in prices to $60 in mid-November; however, prices have since fallen rapidly.

Current factors for the fall in Oil include:

The current OPEC+ high supply is known to hurt demand, as intra-organizational dynamics point to some members wanting to restrain margins to capture market share.
The Market could also be pricing a reopening of the Venezuelan Oil Market to OECD markets if pressure on Maduro from the Trump Administration increases.
- We are still far from this, but the rising tensions between Washington and Caracas are surely getting priced into the Market. In case you did not know, Venezuela sits on the largest proven Oil reserves in the world, even surpassing Saudi Arabia, the world's largest producer.
Traders are also pricing a ceasefire between Russia and Ukraine, which could lead to more supply, leading to the current substantial fall.

Screenshot 2025-12-16 at 1.17.19 PM — World's Proven Oil Reserves by Country – Source: GIS

Caveat on the Russia-Ukraine ceasefire acting as bearish force

Throughout this conflict, there has been many mentions of Russian supply to the West being reduced, but to sponsor their war, Russians have found ways.

Finding new buyers is one: by offering cheap oil and flooding the Markets, there is still large interest for Russian Oil – China and India, the two largest Oil consumers being the biggest buyers (without counting some EU countries still dependent on the imports)

Shadow Fleets are also common, with Tankers from Turkey allowing to transport and sell sanctioned Oil to Western buyers under legal names – Discover the Sanctions Paradox

My contrarian view is one of a Russia-Ukraine conflict ending which could actually be a bullish catalyst for Oil prices, as illegal, cheaper oil would be less available and a reopening of traditional Markets to Russia could add to the competitive bidding. That could result in a sell-the-rumour, buy-the-news reaction.

But it's just a theory.

In any case, let's dive into a multi-timeframe analysis of WTI Oil to spot if Oil trading at 2025 presents a technical opportunity or a trap.

Discover:

US Oil (WTI) Multi-timeframe Technical Analysis

Daily Chart

Screenshot 2025-12-16 at 2.40.20 PM — US Oil (WTI) Daily Chart, December 16, 2025 – Source: TradingView

Oil has broken below its short-term Channel mentioned in our preceding Analysis, strongly reacting to the 50-Day Moving Average.

The MA stands out as the key Technical Indicator for the Oil trend, providing very strong entry points throughout the descent.

As a matter of fact, any long-term technical reversal would be valid only on a weekly close above the 50-Day MA.

With no sign of divergence and a consistent fall, technicals are signalling that the downtrend is stable and is not showing signs of weakness.

Nevertheless, some reversal signs could be emerging on shorter timeframes.

Let's dive into it.

4H Chart and Technical Levels

Screenshot 2025-12-16 at 2.53.52 PM — US Oil (WTI) 4H Chart, December 16, 2025 – Source: TradingView

A reversal could be near, with the second wave of selling forming an exact measured move of the preceding selloff.

Coming in precisely at the lows of the Daily Channel seen on the higher timeframe, elements are adding into a potential reversal.

The price action is still mostly bearish, so to get confirmation of such a reversal, traders will need to see a bullish candle which closes at least above the preceding 4H candle ($55.65).

Levels to place on your WTI charts:

Resistance Levels

Key September Resistance $65 to $66
May range Resistance $63 to $64
$60.90 Past Week highs
$58.265 short-timeframe pivot level
May Range lows support $59.00 to $60.50 (Broken, now Major Pivot)

Support Levels

$55 to $56.50 2025 Support and Channel lows (testing)
Session lows $55.00
2019 mini support $53 to $54
Mid-2019 Main support $51 to $52.50

1H Chart

Screenshot 2025-12-16 at 2.58.43 PM — US Oil (WTI) 1H Chart, December 16, 2025 – Source: TradingView

The selloff is very strong and may not reverse suddenly.

Keep an eye on whether the session closes below $55.00 which acts as the key level for further action.

A weekly close would confirm a further breakdown.

Failing to break the lows however may lead to some consolidation. As said on the 4H timeframe, any reversal would require an initial sign of reversal (strong bull candle).

Safe Trades!

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