Crude oil prices experienced a significant decline, closing down 1.38% at Rs 5,071, as markets contended with increasing indications of oversupply and escalating concerns regarding a global oil glut. Rising output from OPEC+ alongside robust production increases from non-OPEC producers, especially in the Americas, has persistently exerted downward pressure on prices, as Brent crude approaches the $50 range. Sentiment faced additional pressure from anticipations that the conflict in Ukraine might approach a resolution, which could lead to a relaxation of restrictions on Russian oil flows, thereby contributing to supply in a market that is already well-balanced.

Weak economic indicators from China have cast a shadow over the demand outlook, though downside risks have been somewhat mitigated by geopolitical uncertainty following reports of potential US military action in Venezuela. In terms of inventory, US crude oil stocks experienced a decline of 1.81 million barrels for the week ending December 5, which was below market expectations. Conversely, inventories at Cushing increased by 308,000 barrels. Gasoline stockpiles experienced a notable increase of 6.4 million barrels, while distillate inventories rose by 2.5 million barrels, highlighting apprehensions regarding weak near-term demand.

The International Energy Agency has revised its forecast for the 2026 surplus downwards to 3.84 million barrels per day, attributing this adjustment to a deceleration in supply growth and favorable macroeconomic conditions, while still indicating a significant oversupply remains in the market.

The market is currently experiencing new selling pressure, as evidenced by a 27.68% increase in open interest alongside a price decline of Rs 71, suggesting a significant aggressive short build-up. Crude oil currently exhibits immediate support at Rs 5,000, with a breach of this level potentially catalyzing a decline toward Rs 4,929. On the upside, resistance is observed at Rs 5,148, with a sustained move above potentially