Crude oil declined by 1.65% to Rs 5246, as apprehensions regarding an expanding supply glut eclipsed ongoing geopolitical uncertainties. Market participants are currently anticipating the upcoming IEA and OPEC+ reports, which are expected to provide greater clarity on supply-demand expectations. The IEA previously anticipated a significant surplus for 2026, whereas OPEC+ has recently revised its Q3 forecast from a deficit to a surplus. Increased output from Iraq, specifically at Lukoil’s West Qurna-2 oilfield, has contributed additional weight to the market, accounting for approximately 0.5% of global supply. This development aids in mitigating the risk premiums associated with the ongoing stagnation of peace negotiations in Ukraine and the rising tensions between the U.S. and Venezuela.

Fitch Ratings has revised downward its price assumptions for the years 2025 to 2027, attributing this adjustment to concerns regarding oversupply and the pace of production growth exceeding that of consumption. Global supply developments demonstrated resilience, as U.S. production reached a historic 13.84 million bpd, with both New Mexico and offshore Gulf output achieving multi-year peaks. In November, China’s crude imports experienced a significant increase of nearly 5% year-on-year, reaching 12.38 million bpd, marking the highest level since August 2023. U.S. crude inventories experienced an increase for the second consecutive week, rising by 0.574 million barrels, whereas gasoline stocks surged by 4.52 million barrels.

The EIA’s latest outlook has revised upward the expectations for U.S. output in 2025 and has amplified concerns regarding a more pronounced surplus in 2026. This sentiment is mirrored by the IEA, which anticipates that global supply growth will exceed demand by over 4 million bpd in 2026.

The market experienced long liquidation, evidenced by a decline in open interest of 8.35%, bringing it down to 11,863, coinciding with a price drop of Rs 88. Immediate support stands at Rs 5210, and a breach below this level could pave the way toward Rs 5175. Resistance is identified at Rs 5306, with a potential upward movement leading prices to Rs 5367.