Crude oil prices experienced a decline in the previous session, closing down by 1.14% at Rs 5,210, as investors took profits while evaluating the wider ramifications of the US military operation in Venezuela, in conjunction with other persistent geopolitical risks. Market sentiment exhibited a cautious demeanor following OPEC+’s decision to maintain its output policy, sidestepping any discourse on the political crises impacting significant producers like Venezuela, Iran, Russia, and various regions in the Middle East.

Despite possessing the largest proven oil reserves globally, Venezuela’s production has experienced a structural decline attributed to underinvestment and US sanctions, averaging approximately 1.1 million barrels per day in the previous year. The recent cessation of operations at Venezuelan wells, coinciding with a partial US blockade, has heightened supply risks; however, these apprehensions have been mitigated by increasing supply from alternative sources. Supply-side pressures remained evident, with North Sea crude production supporting the Brent benchmark anticipated to increase to approximately 575,000 bpd in February.

US crude production reached unprecedented levels, with total output soaring to 13.87 million bpd in October, bolstered by significant increases in New Mexico and offshore Gulf production. The IEA has made a slight adjustment to its forecast for the surplus in 2026, yet it continues to anticipate a market that remains oversupplied.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a 3.86% decrease in open interest to 16,866 contracts, accompanied by a Rs 60 decline in price. Crude oil exhibits support at Rs 5,171, with a breach below this level potentially revealing Rs 5,132, while resistance is identified at Rs 5,283 and subsequently at Rs 5,356 on a continued upward trajectory.