Oil Technical Analysis: WTI Crude Tests $61 Resistance with Breakout Potential

WTI crude oil is exhibiting notable technical improvement as of January 23, 2026, with the commodity having cleared a long-term downtrend and now testing critical resistance at $61 per barrel [1]. The current trading level of approximately $59.70 represents modest gains of +0.58% on the day and +2.32% over the past week, though the year-over-year decline of -20.03% reflects persistent oversupply concerns weighing on prices [2]. Technical indicators including RSI and MACD are suggesting a potential shift to a higher-bias trend, while moving-average crossovers indicate positive momentum building [1]. The identification of CTA (Commodity Trading Advisor) short covering as a potential catalyst adds a technical dimension to the bullish case, though traders will be watching for confirmation above $61 before committing to new positions [1].

The $61 level represents a significant technical hurdle that has previously capped oil prices, making a sustained breach a meaningful development for the commodity’s medium-term trajectory. The support zone of $58–$60 provides a technical floor that bulls will be eager to defend if pullback pressure emerges [1]. The proximity to this resistance level, combined with the recent trend clearance, creates a near-term inflection point that could determine whether the multi-month downtrend has truly reversed or represents merely a technical bounce within a broader declining structure.

Despite the encouraging technical developments, fundamental factors present significant headwinds to any sustained oil price recovery. U.S. crude inventories showed a

for the week ending January 16th, substantially exceeding expectations of a 1 million barrel increase and reinforcing oversupply narratives [2][4]. Global oil supply has entered 2026 with a large surplus buffered by strong production, while Venezuelan production increases could add additional downward pressure on prices as that country’s oil reforms attract investment and expand output [1][5]. U.S. crude production remains robust at approximately 13.87 million barrels per day, contributing to the supply-side pressure weighing on prices [2].

The Energy sector’s performance provides important context for the equity implications of oil price movements. The sector ranks as the

at just +0.04%, significantly underperforming the Basic Materials (+1.28%) and Technology (+1.13%) sectors on January 23, 2026 [0]. This muted sector response suggests institutional investors remain cautious regarding the sustainability of any oil price rally, preferring to await confirmation of fundamental improvement before committing capital to energy equities. The broader market showed mixed results, with the S&P 500 rising +0.18% and NASDAQ gaining +0.42%, while the Dow Jones Industrial Average declined -0.32% and the Russell 2000 fell -1.41%, indicating continued sector rotation away from energy despite the commodity’s technical improvement [0].

The Trump administration’s energy-related geopolitical positioning has created periodic risk premium in oil markets, though recent easing of tensions has contributed to price softness [4][9]. Naval positioning near Iran and discussions regarding Greenland’s strategic importance for missile defense represent evolving variables that could impact oil markets through supply disruption pathways [9]. However, the absence of immediate supply disruptions has allowed oversupply fundamentals to dominate price action, limiting the magnitude of any geopolitical risk premium.

The policy environment remains a significant variable for energy market participants. OPEC+ production decisions represent perhaps the most consequential near-term factor for oil prices, as the cartel’s ongoing efforts to manage supply continue to influence global balances. Trade and sanctions policies under the new administration remain evolving variables that could impact both supply chains and demand trajectories. The upcoming summer driving season will introduce seasonal demand patterns that could influence price direction, though the magnitude of any seasonal uplift remains uncertain given broader economic growth concerns.

The divergence between improving technical indicators and persistent fundamental headwinds creates a nuanced environment for market participants. The identification of CTA short covering as a potential catalyst highlights the role of positioning and technical trading in current oil market dynamics [1]. When combined with the oversupply narrative, this suggests that any breakout move may face selling pressure from producers and speculative participants looking to establish new short positions at higher price levels.

The Q4 2025 earnings season for major energy companies represents an important near-term catalyst that could influence both energy equity performance and market sentiment toward the broader sector. Exxon Mobil and Chevron are both scheduled to report on January 30, with Morgan Stanley maintaining an Overweight rating on XOM despite lowering its price target [6]. Chevron’s reported plan to sell Singapore refining assets valued at over $1 billion in Q1 2027 reflects strategic portfolio optimization amid challenging refining margins [7]. SLB’s better-than-expected Q4 earnings and raised dividend, combined with management’s indication that business headwinds are behind the company, suggests improving conditions in the oilfield services segment [8].

The integrated major business model is demonstrating resilience through refining margins despite upstream weakness, while midstream companies like EPD benefit from fee-based models that provide stability in a low-price environment [10][11]. This divergence within the energy sector suggests that equity selection will be critical for investors seeking exposure to energy markets, with business model and segment exposure determining relative performance outcomes.

• Supply Increases
  : Venezuelan production expansion and continued U.S. output could exacerbate oversupply conditions, limiting upside potential even if technical breakout occurs [1]
• Inventory Build Patterns
  : Continued inventory builds would reinforce the oversupply narrative and create selling pressure on any price rallies
• Technical Reversal Risk
  : Current positioning above the long-term downtrend requires confirmation through sustained trading above $61; failure to maintain this level could trigger meaningful pullback toward the $58–$60 support zone
• U.S. Dollar Strength
  : A stronger dollar typically weighs on dollar-denominated commodities including oil, potentially limiting upside despite technical improvements [1]
• Global Economic Slowdown
  : Softening demand from major economies remains a persistent concern that could override technical factors [3]

• Technical Breakout
  : Sustained movement above $61 could signal a trend reversal with targets near $65, representing approximately 8.8% upside from current levels [1]
• Earnings Season
  : Q4 2025 results from major energy companies may provide catalysts for equity revaluation and sector rotation
• Oilfield Services Recovery
  : SLB’s positive outlook suggests improving conditions that could benefit the broader services segment [8]
• Midstream Stability
  : Fee-based business models provide defensive characteristics within the energy sector during commodity price uncertainty [11]

The time sensitivity of this analysis centers on the $61 resistance level, which represents an immediate inflection point for oil prices. Market participants should monitor daily WTI price action around this level, with EIA inventory data and OPEC+ commentary providing near-term fundamental catalysts. The January 30 earnings reports from Exxon Mobil and Chevron will provide additional insight into the health of the integrated energy sector and management outlook for 2026.

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This analysis integrates technical and fundamental perspectives on WTI crude oil as of January 23, 2026. The commodity has cleared a long-term downtrend and is testing $61 resistance, with a breakout potentially targeting $65 [1]. Current prices around $59.70 reflect modest gains but significant year-over-year declines due to oversupply conditions [2]. The 3.6 million barrel inventory build exceeds expectations and reinforces supply-side concerns [4]. The Energy sector’s weak performance (+0.04%) suggests investor caution regarding rally sustainability [0]. Major energy earnings on January 30 and upcoming OPEC+ decisions represent key near-term catalysts [6][7]. Geopolitical developments under the Trump administration remain evolving variables that could introduce supply disruption risks [9]. The technical improvement must be confirmed through sustained trading above $61 to signal a meaningful trend reversal rather than a technical bounce within an ongoing downtrend.