Crude oil prices exhibited an upward trend, concluding the session with a gain of 1.12% at Rs 5,240, as rising geopolitical tensions contributed to an increase in risk premiums, notwithstanding the mixed signals from inventory data. Unrest in the Middle East, characterized by Saudi air strikes in Yemen and Iran’s assertion of a “full-scale war” stance against the US, Europe, and Israel, has intensified apprehensions regarding possible supply disruptions from critical producing areas.

Sentiment was further shaped by diplomatic developments, as US President Donald Trump and Ukrainian President Volodymyr Zelenskiy suggested advancements toward a peace framework, although several unresolved issues persist. In a move that bolsters the demand outlook, China has indicated intentions to increase fiscal spending in 2026, thereby reinforcing expectations of consistent growth in oil consumption. On the supply side, US inventory data presented a predominantly negative outlook.

The EIA reported an increase of 405,000 barrels in crude stocks, bringing the total to 424.8 million barrels, which was contrary to expectations of a draw. Additionally, Cushing inventories saw a rise of 707,000 barrels. Refinery operations decreased, with utilisation falling to 94.6%. Gasoline stocks increased by 2.86 million barrels, whereas distillate inventories experienced a modest rise of 202,000 barrels. Net US crude imports increased significantly to 2.47 million bpd. The International Energy Agency has adjusted its oil demand growth projections for 2025–26 upwards while simultaneously reducing supply growth estimates, thereby tightening the anticipated surplus.

Crude oil is currently experiencing short covering, as evidenced by a 4.52% decline in open interest to 17,844, coinciding with a price increase of Rs 58. Support is identified at Rs 5,184, with additional potential decline toward Rs 5,127. Resistance is established at Rs 5,284, and a breach above this threshold may lead to a test of Rs 5,327.