[MARKET ANALYSIS] Crude softer with market oversupply overshadowing geopolitics

• WTI and Brent futures fell after Washington moved to tighten control over Venezuela’s oil industry, with President Trump saying Venezuela would hand over up to 30-50mln bbls of crude to the US to be sold at market prices, with proceeds managed by the President for the benefit of both countries.
• Brent briefly dipped under USD 60/bbl (USD 59.88-60.40/bbl range) and WTI temporarily gave up a USD 56/bbl handle. Trump is set to meet Chevron, ConocoPhillips, Exxon and other US producers on Friday to discuss major investment in Venezuela’s oil sector, with the President saying US companies would invest “billions.”
• Nat Gas on the other hand rebounds following yesterday's slump cited by some to a warmer-than-expected winter.
• On Russia-Ukraine, US envoy Witkoff thinks they are largely finished on security guarantees and protocols, and are close to finishing off a robust prosperity agreement for Ukraine. That being said, everything discussed over the week thus far is contingent on a ceasefire, which ultimately requires the nod from Russia, Ukraine, and the US.
• In the Middle East, Iran's army chief said President Trump and Netanyahu's statements on the demonstrations represent a threat to which “Tehran will respond". Meanwhile on the Saudi-UAE front, Yemeni Saudi-backed government forces reportedly advance towards Aden. As a reminder, on January 2, 2026, the Southern Transitional Council (STC), backed by the UAE, announced a new constitution for an independent southern state with Aden as its capital.
• Back in the US, Private Inventory data yesterday showed a large surprise draw is stockpiles, although the internals showed larger builds than expected. Traders eye the DoEs later.

The decline in WTI and Brent futures highlights the overshadowing impact of anticipated increased supply from Venezuela, despite significant geopolitical tensions in the region. This combination of market oversupply and potential U.S. investment in Venezuela’s oil sector could further pressure prices, while ongoing geopolitical developments—specifically in Ukraine and the Middle East—add layers of uncertainty affecting overall market sentiment, particularly for oil and gas-related assets.