Oil falls as investors weigh supply outlook, Venezuelan uncertainties

By Shariq Khan

NEW YORK, Jan 6 (Reuters) – Oil prices fell on Tuesday as the market weighed expectations of ample global supply this year against uncertainty around Venezuelan crude output after the U.S. capture of Nicolas Maduro, the South American country’s leader.

Brent crude futures fell $1.06, or 1.7%, to settle at $60.70 a barrel, while U.S. West Texas Intermediate crude fell $1.19, or 2%, to $57.13 a barrel.

“It is premature to evaluate the impact of Nicolas Maduro’s capture on the oil balance. What seems obvious, nonetheless, is that oil supply will be sufficient in 2026, with or without an increase in production from the OPEC member,” said Tamas Varga, an analyst at PVM Oil.

Global oil demand likely grew by around 900,000 barrels per day last year, compared to a historical trend rate of 1.2 million bpd, Morgan Stanley analysts said in a note on Tuesday.

OPEC supply grew 1.6 million bpd and non-OPEC supply grew about 2.4 million bpd between the fourth quarters of 2024 and 2025, the Morgan Stanley analysts said.

“This means both sources of supply enter 2026 at a very strong level,” they said, adding that could put oil markets in a surplus of as much as 3 million bpd in the first half of 2026.

Market participants polled by Reuters in December also said they expected oil prices to be under pressure in 2026 because of rising supply and weak demand. [O/POLL]

“As the evolving global oil surplus becomes more transparent, the stage for a renewed downturn by next week will be set,” oil trading advisor Ritterbusch and Associates said.

POSSIBILITY OF MORE PRICE PRESSURE AFTER CAPTURE OF MADURO

Price pressure could be exacerbated by the U.S. capture of Maduro on Saturday and its potential to hasten an end to a U.S. embargo on Venezuelan oil, leading to higher output.

Market participants were also debating the future trajectory of Venezuelan supply after U.S. President Donald Trump claimed U.S. oil companies were ready to invest in the South American country to boost its production and exports.

U.S. oil company CEOs are expected to visit the White House as early as Thursday to discuss investments in Venezuela, according to three sources familiar with the planning.

Venezuela’s oil sector has long been in decline, due in part to underinvestment and U.S. sanctions. Oil production from the country averaged 1.1 million bpd last year.

“We estimate only 300,000 barrels per day of additional supply within the next two to three years on limited incremental spending,” said Janiv Shah, an analyst at Rystad Energy.

“Some of this can be financed organically by (state-run oil company) PDVSA but international capital would need to be committed to make 3 million bpd by 2040 possible,” Shah said.

Meanwhile, U.S. crude inventories fell last week while fuel stocks rose, market sources said, citing American Petroleum Institute figures on Tuesday. The API figures showed a 2.77 million barrel decline in U.S. crude oil stocks. [API/S]

Official U.S. government statistics on the country’s oil inventories are due at 10:30 a.m. EST on Wednesday. Eight analysts polled by Reuters ahead of the report estimated on average that crude inventories rose by about 500,000 barrels in the week ending January 2. [EIA/S]

(Reporting by Shariq Khan, Seher Dareen, Robert Harvey, Anushree Mukherjee and Emily Chow; Editing by Bernadette Baum, David Goodman, Paul Simao, Nick Zieminski and Lincoln Feast.)