Crude oil prices experienced a slight decline yesterday, with the benchmark closing down 0.5% at Rs 5,422. This movement can be attributed to the recent easing of civil unrest in Iran, which has diminished the likelihood of a U.S. military response that might have threatened the stability of Middle Eastern supply chains. Decreased geopolitical risk premiums influenced market sentiment, mitigating the prior volatility associated with tensions in Iran.

Production disruptions have also been observed on a regional scale, as Tengizchevroil, led by Chevron, has temporarily ceased operations at the Tengiz and Korolev fields due to power distribution challenges, resulting in intermittent support. According to the U.S. EIA’s January Short Term Energy Outlook, U.S. crude production, which reached record highs in 2025, is anticipated to stabilize in 2026 and 2027. This adjustment is attributed to changes in drilling activity and sustained high inventory levels.

Global inventories are accumulating at a pace that outstrips the growth in demand, a structural element exerting downward pressure on prices, notwithstanding occasional supply risk occurrences. U.S. crude inventories increased significantly by 3.4 million barrels in the most recent weekly report, surpassing market expectations and strengthening bearish near-term fundamentals.

From a technical perspective, a new wave of selling pressure has been observed, indicated by a 4.71% rise in open interest, while prices have decreased by Rs 27. Crude oil presently exhibits immediate support at Rs 5,371, with a possible extension of the range toward Rs 5,319 should a breach occur below that threshold. On the upside, resistance is positioned around Rs 5,455, and a sustained movement above this level could challenge Rs 5,487.