London, Jan 7, 2026, 10:50 GMT — Regular session
- Oil prices fell after Donald Trump said the United States had struck a deal to import Venezuelan crude.
- Traders weighed what a supply shift would mean for China and for an oil market already focused on a 2026 surplus.
- Focus turns to U.S. inventory data later on Wednesday and White House talks with oil executives expected as early as Thursday.
Oil prices fell on Wednesday after U.S. President Donald Trump said the United States had reached a deal to import up to $2 billion worth of Venezuelan crude, a move traders read as adding supply into a market already wrestling with a glut narrative. Brent crude futures fell 35 cents, or 0.6%, to $60.35 a barrel by 0928 GMT, while U.S. West Texas Intermediate crude fell 52 cents, or 0.9%, to $56.61. Both benchmarks extended declines of more than $1 from the previous session.
The Venezuela headline lands as investors are increasingly trading oil on expectations that supply will outpace demand through 2026. A Reuters poll of 34 economists and analysts forecast Brent would average $61.27 a barrel this year and WTI $58.15, with respondents looking for a surplus — where supply exceeds demand — of roughly 0.5 million to 3.5 million barrels per day. “Even with quotas unchanged, supply is expected to exceed demand, keeping prices under pressure through the year,” wrote Bridget Payne, head of energy forecasting at Oxford Economics. Reuters
Traders are also trying to map how a U.S.-Venezuela deal would reshape crude flows and pricing power, especially for China, Venezuela’s top buyer. China denounced the U.S. as a bully, and Venezuela has not confirmed the deal, Reuters reported, leaving uncertainty over how quickly barrels could be redirected and on what terms.
In Asia, market participants expect China’s independent refiners — known as “teapots” — to lean more heavily on other sanctioned heavy crude, including from Iran, in the coming months. “The Venezuela drama hits China’s independent refineries the hardest,” said June Goh, an analyst at Sparta Commodities, adding that ample Russian and Iranian supply should limit any rush into non-sanctioned grades. Data from Kpler showed China imported 389,000 barrels per day of Venezuelan oil in 2025, about 4% of its seaborne crude imports. Reuters
In the United States, refiners signaled they have capacity to run more Venezuelan barrels if supplies rise. Phillips 66 Chief Financial Officer Kevin Mitchell said on a conference call that its Lake Charles and Sweeny refineries can process “a couple of hundred thousand” barrels per day of Venezuelan crudes, and Chief Executive Mark Lashier said restoring production would take “years, if not decades” of upstream investment. Venezuelan crude is typically a heavy sour grade — denser and higher in sulfur — which some Gulf Coast plants are built to process, often at lower margins than lighter grades. Reuters
U.S. inventory data is the next immediate test for the supply-demand balance. The American Petroleum Institute (API), an industry group, reported a 2.8 million-barrel draw in crude inventories in its latest weekly report, according to Investing.com data; the U.S. Energy Information Administration (EIA) publishes its weekly petroleum status report at 10:30 a.m. Eastern time on Wednesdays.
On the charts, the February WTI contract has initial support at $56.36 a barrel, with deeper levels at $55.58 and $54.33, Barchart data showed. Resistance was pegged at $58.39, then $59.64 and $60.42.
But the downside case still hinges on details that remain fluid, including how much crude actually moves, how fast it gets to the U.S. market, and whether sanctions, storage and shipping constraints slow deliveries. A sharper-than-expected inventory draw, or any renewed disruption to major export routes, would quickly test the market’s conviction that supply will stay ample.
What traders watch next is Wednesday’s EIA inventory report and the direction of U.S.-Venezuela policy talks, with oil company CEOs expected to visit the White House as early as Thursday to discuss investment plans.
