Crude oil settled 0.15% lower at Rs 7,928, influenced by downward revisions to global oil demand forecasts for 2026, a significant increase in U.S. crude inventories, and ongoing uncertainty regarding efforts to resolve the Iran conflict. Ongoing attacks on shipping in the Middle East have introduced additional geopolitical risk; however, this impact has been mitigated by worries regarding declining consumption and the rising availability of oil in the United States. Iranian sources indicated that there were no negotiations with the United States regarding an extension of the ceasefire.

Concurrently, separate incidents involving the United States and Iran-aligned Houthis were reported in the vicinity of the Strait of Hormuz and Bab el-Mandeb, both of which are vital corridors for energy exports from the Middle East. Shipping activity thru the Strait of Hormuz has declined markedly, reaching a one-week low of merely eight vessels. This contrasts sharply with the typical daily transit of 125-140 vessels prior to the conflict, underscoring a considerable disruption to regional trade flows. U.S. crude inventories experienced a significant increase of 17.4 million barrels, reaching a total of 424.4 million barrels for the week ending August 7. This rise notably surpassed forecasts, which anticipated a draw of 1.4 million barrels. Stocks at the Cushing delivery hub experienced an increase of 1.6 million barrels.

Concurrently, refinery crude runs saw an uptick of 26,000 barrels per day, whereas refinery utilisation witnessed a decline of 0.3 percentage points. Petrol inventories experienced a decrease of 1 million barrels, bringing the total to 208.7 million barrels. In contrast, distillate stocks saw a slight reduction of 10,000 barrels, resulting in a total of 107.1 million barrels. Net U.S. crude imports rose by 1.77 million barrels per day, significantly contributing to the considerable inventory build. OPEC has adjusted its 2026 global oil demand growth forecast to 580,000 barrels per day, representing the fourth consecutive downward revision. However, it has increased its outlook for demand growth in 2027.

Technically, the market is experiencing long liquidation, evidenced by a 0.79% decline in open interest to 8,807 contracts, alongside a price decrease of Rs 12. Crude oil exhibits immediate support at Rs 7,841, with subsequent support at Rs 7,754, while resistance is positioned at Rs 8,032. A sustained move above Rs 8,032 could trigger a recovery toward Rs 8,136, whereas failure to hold Rs 7,841 may extend downside pressure amid weakening demand expectations and elevated inventory levels.