Crude oil prices experienced a slight decline, closing lower by 0.42% at Rs 5,213, as the impact of a modest increase in US inventories overshadowed existing geopolitical risk premiums. The downside, however, remained constrained in light of diminishing expectations for a Russia–Ukraine ceasefire and ongoing geopolitical tensions in the Middle East and South America.

Supply dynamics remained a focal point, as production from the five North Sea grades is anticipated to support dated Brent, projected to average 575,000 barrels per day in February, an increase from 565,000 bpd in January. Market participants are broadly expecting that OPEC+ will confirm its decision to maintain the current production levels during its meeting on January 4, in light of increasing indications of a global oil oversupply.

In the interim, supply risks have escalated as Venezuela commenced the closure of oil wells, a consequence of a partial US blockade that has limited exports and led to the saturation of domestic storage facilities. On the data front, the EIA reported a 405,000-barrel increase in US crude inventories to 424.8 million barrels for the week ended December 19, contrary to expectations of a 2.4 million-barrel decline. Inventories at Cushing increased by 707,000 barrels, with gasoline stocks rising by 2.86 million barrels and distillate supplies up by 202,000 barrels. Net US crude imports experienced a significant rise of 609,000 bpd.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a 2.42% decrease in open interest to 17,376, coinciding with a price drop of Rs 22. Crude oil exhibits support at Rs 5,184; a decline beneath this level could lead to a test of Rs 5,155. On the upside, resistance is observed at Rs 5,261, and a movement beyond this threshold could propel prices toward Rs 5,309.