Crude oil prices experienced a notable decline, closing 3.9% lower at Rs 5,366, as the geopolitical risk premium diminished and supply-side issues reemerged. Sentiment diminished following U.S. President Donald Trump’s apparent retreat from previous threats of possible military action against Iran, alleviating concerns over immediate disruptions. In a further indication of a bearish sentiment, Venezuela has commenced the reversal of oil production cuts that were implemented in response to the U.S. embargo, leading to the resumption of crude exports.

Pressure intensified due to a significant increase in U.S. crude inventories, marking the largest rise in months, thereby reinforcing concerns about near-term oversupply. In terms of data, U.S. crude stocks increased by 3.4 million barrels to 422.4 million barrels, contrary to expectations of a draw, while gasoline inventories experienced a significant rise of 9 million barrels, greatly surpassing forecasts.

The EIA, in its Short-Term Energy Outlook, projected that U.S. crude output will peak in 2025, subsequently easing to 13.59 mbpd in 2026 and 13.25 mbpd in 2027, with petroleum demand anticipated to remain largely stable. On a global scale, the IEA has revised down its anticipated surplus for 2026, attributing this adjustment to enhancing macroeconomic conditions and a deceleration in supply growth. This comes in the context of OPEC+ slightly raising output for November while sustaining a positive demand forecast.

From a technical perspective, the market is experiencing renewed selling pressure, as evidenced by a 9.77% increase in open interest, which suggests a strong inclination towards short positions. Crude oil currently finds itself with immediate support at Rs 5,322; a breach of this level may result in a decline towards Rs 5,279. On the upside, resistance is observed at Rs 5,424, and a movement beyond this threshold may challenge Rs 5,483.