Is Crude Oil Ready for an Upswing? Reading the Signals from WTI and Brent Markets

The Technical Picture: What’s Brewing in Futures Markets?

Crude oil markets are flashing mixed signals as we head into 2026. WTI crude oil just hit a 4-week high of $59.77 before settling at $59.12 (CLG26), while Brent crude similarly peaked at $63.91 and closed Friday at $63.34 (QAH26). On the surface, these moves look constructive—but dig deeper into the positioning data, and the story becomes more complex.

Investment Flows Tell a Different Tale

According to CFTC’s Commitments of Traders report, speculative long positions in WTI futures have been pulling back. As of the week ending January 6, noncommercial investors held a net-long position of just 57,352 contracts, down 7,239 from the previous week. This positioning is dangerously close to the recent floor of 39,800 contracts hit on October 21, 2025. For context, back in early February 2018, these same investors were sitting on 739,100 net-long contracts.

What does this mean? When institutional capital retreats to such lows, it often signals either capitulation or hesitation—and sometimes, it sets the stage for a reversal. The question traders are asking: is this the bottom, or are fundamentals still deteriorating?

The Venezuela Factor: A New Supply Equation

Here’s where things get interesting. The US now has direct access to Venezuelan heavy crude through a new agreement, with 50 million barrels destined for American refineries, valued around $3 billion. Heavy crude is precisely what US Gulf Coast refineries crave—it can be refined into gasoline and diesel efficiently.

But here’s the catch: if this Venezuelan crude oil supply isn’t just used domestically but also funneled into export channels, the global market faces a different scenario. Increased crude oil flowing into a weakening worldwide demand environment could keep a lid on prices, despite higher production costs for energy companies.

Reading the Market Structure

Both WTI and Brent forward curves are displaying backwardation through February 2027—a market structure that typically signals supply tightness and bullish sentiment. However, backwardation alone doesn’t guarantee prices will climb. The structure could reflect short-term convenience yield rather than a fundamental shift.

If trading algorithms interpret this backwardated curve as “time to buy,” combined with positioning near multi-month lows, we could see algorithmic fund accumulation push crude oil higher. That rally could materialize once markets reopen Sunday evening.

The Real Question: Fundamentals or Technicals?

Here’s where skepticism creeps in. US demand for crude oil may stay firm if policymakers continue favoring fossil fuels over renewable energy alternatives. Yet global demand is cooling. Energy companies certainly have incentive to ramp up Venezuelan production—cheap labor, abundant reserves, fat profit margins. But that’s a profit story, not necessarily a bullish crude oil price story.

The disconnect between energy sector stock performance last week and subdued WTI futures interest suggests the market is pricing in corporate profit opportunities rather than crude oil supply constraint. A distinction worth noting.

What Could Trigger the Next Move

Should crude oil prices break higher on renewed speculative fund participation—despite underlying fundamentals remaining murky—traders should remember the “Rubber Band” principle: what stretches eventually snaps back. Technicals can override fundamentals in the short term, but markets always revert to what’s actually happening in supply and demand.

For now, watch whether WTI can sustain above $59.77 or if crude oil retreats to test support. The answer will reveal whether this is genuine bullish momentum or just algorithmic noise.