Crude oil futures declined by 0.97%, closing at Rs 5,591, influenced by ongoing oversupply issues and subdued fuel demand patterns in the United States. Global oil demand averaged 104.4 million bpd through September 17, which is slightly below JP Morgan’s forecast. However, the deceleration in travel activity in the U.S. and China following the summer peak has contributed to a subdued sentiment.

Conversely, demand from Europe, the Middle East, and Latin America continues to show resilience, while OPEC officials, including the oil minister of Kuwait, anticipate a resurgence in demand from Asia in light of the recent reduction in U.S. interest rates. On the supply side, QatarEnergy has increased the term price for al-Shaheen crude for November loading to its highest level in eight months, indicative of robust regional fundamentals. U.S. government data contributed to market volatility, as crude inventories fell by 9.3 million barrels to 415.4 million, significantly surpassing expectations of a modest draw.

Gasoline inventories experienced a decrease of 2.3 million barrels, whereas distillate stocks surged significantly by 4 million barrels, exceeding expectations. Meanwhile, OPEC upheld its positive forecast for global oil demand growth for this year and the next, attributing it to strong economic expansion and highlighting that OPEC+ increased output by 509,000 bpd in August as Saudi Arabia persists in its efforts to reclaim market share.

In technical terms, the crude market is experiencing long liquidation, evidenced by a significant decline in open interest, which has decreased by 62.68% to 2,424, coinciding with a price drop of Rs 55. Support is established at Rs 5,554, with the potential for a test at Rs 5,517 if this level is breached. Resistance is identified at Rs 5,660, and a breakout above this threshold could lead to a target of Rs 5,729.