Crude Struggles to Break $60 Amid Geopolitical and Macro Pressures

Crude Oil has been given every reason to rally over the past week but has failed to do much of anything. Markets had sucked risk-premia out of this market heading into the Witkoff – Kushner negotiations with the Kremlin.

Through November, President Trump’s tone towards China and Russia turned much more cordial. The President agreed to a Beijing trip after a phone call with China’s Xi while displaying a largely negative shift in attitude towards Ukraine. Peace talks and easing tensions came alongside a US naval mobilization towards Venezuela, which added a new geopolitical risk catalyst to the mix.

Mobilizations cost hundreds of millions if not billions, and that’s without aerial and cruise missile strikes on fishing boats. There are going to be a lot of journalists and fear brokers talking about a full-scale Venezuela invasion, but I would wait on some more extreme actions before making that bet. Maduro emptied Venezuelan jails through previous administrations, sending a free and destabilizing force into the US. This is directly out of the Russian playbook. President Trump is likely using the military presence to force Maduro into taking these individuals back, while also pressuring his ties to Hezbollah and Iran. Venezuela and Colombia have also been the most vocal and ardent supporters of Palestine, while Venezuela houses a very large and powerful sect of Hezbollah militants. We’re working towards strengthening key ties with Brazil and Argentina, and can’t afford a middle-eastern style outbreak of secular violence in South America.

There is a lot more at play than an “oil grab” that journalists keep writing about. Maduro has already agreed to take back these criminal migrants, and would have to be near suicidal to engage with the US on full military action. Venezuela could be, but is not yet, a bull catalyst we’re really playing.

The breakdown of Russian / Ukraine peace negotiations and the ever increasing strikes on Russian oil infrastructure is another story – – this is a bullish catalyst the market is shrugging off while OPEC makes fairly bullish adjustments to their forecasts and spare capacity calculations. These are the catalysts we’re paying attention to.

Technical Analysis:

Crude needs to retest 60.00*** with volume and conviction today. A settlement above 60.00*** through a weekend fraught with geopolitical risk would leave traders on edge. I would not be comfortable as a short here, but like risk-defined upside plays more than outright futures with the Fed and macro-economic data getting worse and worse. The chance for a macro risk-off flush dragging crude lower is becoming more and more of a risk.