Crude oil prices experienced an increase of 0.95%, closing at Rs 5,228. This uptick was influenced by geopolitical tensions following the US’s seizure of a tanker associated with Venezuela, which has heightened concerns regarding possible supply disruptions. Venezuela characterized the action as an instance of piracy, with tensions escalating further due to Ukraine’s ongoing assaults on shadow-fleet tankers linked to the Russian oil trade. Russia, however, saw an uptick in output in November, with production rising to 9.367 million bpd, indicative of the OPEC+ decision to implement a measured increase in output quotas. Price increases have been constrained due to anticipations of a worldwide surplus.

The IEA reaffirmed its forecast for an unprecedented supply surplus, albeit with a slight adjustment to its estimate, attributing this to marginally improved demand growth and less-than-anticipated supply expansions stemming from sanctions imposed on Russia and Venezuela. Global inventories have reached a four-year peak, heightening apprehensions regarding surplus supply.

In contrast, OPEC upheld its 2026 supply and demand outlook, indicating a more balanced market and maintaining its global demand growth forecasts, bolstered by a stable macroeconomic environment. In the latest week, US crude inventories experienced a decline of 1.81 million barrels. However, gasoline and distillate inventories saw significant increases, and crude stocks at Cushing rose following four consecutive weeks of decreases, which constrained bullish momentum.

From a technical perspective, the market is experiencing short covering, evidenced by a significant decline in open interest of 33.38%, bringing it down to 7,894, while prices have increased by Rs 49. Crude oil demonstrates support at Rs 5,188; a breach beneath this level could lead to a decline towards Rs 5,147. Resistance is identified at Rs 5,265, and a breakthrough could lead to further gains towards Rs 5,301.