Crude oil experienced a significant increase of 2.56% yesterday, closing at Rs 5,776, driven by a contraction in global supplies due to various disruptions in major producing areas. Prices demonstrated continued strength following the confirmation of strikes by Ukraine’s military on two oil pumping stations located in Russia’s Volgograd region. Additionally, the declaration of a state of emergency in Novorossiisk, a significant hub for Russian oil and grain exports, has heightened concerns regarding the stability of supply.

Furthermore, the halted revival of Kurdish oil exports and Chevron’s limited Venezuelan shipments stemming from U.S. permit complications have enhanced market optimism. On the geopolitical front, Iran has affirmed that oil sales to China will persist in the face of ongoing Western pressure, alleviating concerns regarding potential additional sanctions.

In the interim, the International Energy Agency has forecasted an increase in global oil supply for 2025, cautioning about possible surpluses emerging by 2026. Nonetheless, recent data from the U.S. bolstered prices, as the Energy Information Administration indicated a draw of 607,000 barrels in crude inventories, contrary to expectations for an increase. Gasoline inventories decreased by 1.1 million barrels, and distillate stocks declined by 1.7 million barrels, indicating strong demand, while refinery throughput increased slightly despite a minor reduction in utilization rates. OPEC has reaffirmed its robust outlook for oil demand growth in 2025 and 2026, underscoring the resilience of the global economy.

Crude oil is experiencing new buying activity, as evidenced by a 2.48% increase in open interest, reaching 11,219 contracts. Support is established at Rs 5,675, beneath which prices could potentially decline to Rs 5,575. Conversely, resistance is identified at Rs 5,829, with the possibility of an upward movement towards Rs 5,883.