Crude oil increased by 0.89% to Rs 5356, buoyed by escalating geopolitical tensions following Russia’s confirmation that discussions with US officials did not yield any agreement regarding a possible peace deal for Ukraine. This setback, along with recent Ukrainian strikes on Russia’s Black Sea oil infrastructure, has rekindled supply-side concerns and introduced a risk premium to prices.

The API reported a rise in crude stocks of 2.48 million barrels, accompanied by notable increases in gasoline at 3.14 million barrels and distillates at 2.88 million barrels, underscoring near-term inventory pressure. OPEC+ has decided to keep its production levels steady for the first quarter of 2026, reflecting a prudent approach in light of concerns regarding a potentially oversupplied market. The group has also sanctioned a new framework for the reevaluation of members’ maximum production capacity, set to commence in 2027.

In the interim, US oil production has persisted in overcoming subdued prices, reaching a new peak of 13.84 million bpd in September, bolstered by robust output from New Mexico and the Gulf of Mexico. The most recent EIA data indicated an increase in US crude inventories by 0.574 million barrels, which was unexpected given the anticipation of a draw, while gasoline stocks experienced a significant rise of 4.52 million barrels. Distillate inventories, however, experienced a modest decline of 0.293 million barrels.

Crude oil is currently experiencing short covering, as evidenced by a 2.26% decline in open interest to 13,294, alongside a price increase of Rs 47. Support is positioned at Rs 5299, with further downside potential extending to Rs 5241. Resistance is currently positioned at Rs 5400, and a breakout beyond this level may lead to further gains towards Rs 5443.