Crude Oil settled 3.33% higher at Rs. 9,800 as Houthi attacks in Saudi Arabia heightened concerns over further disruptions to Middle Eastern energy supplies. Reportedly, the evacuation of its headquarters in Dhahran has been ordered, coinciding with reports of an oil spill in the UAE. Additionally, a pipeline shutdown in Libya has led to a reduction in production at the Hamada and Tahara oilfields. Supply concerns remain heightened due to disruptions in shipments via the Strait of Hormuz, a situation exacerbated by the ongoing US-Israeli conflict with Iran. In a demonstration of bullish sentiment, US crude inventories experienced a decline of 3.06 million barrels, bringing the total to 412.5 million barrels for the week ending October 16.
This reduction notably surpassed expectations, which had anticipated a draw of 820,000 barrels. Petrol inventories decreased by 2.95 million barrels, bringing the total to 205.3 million barrels. In contrast, distillate stocks saw an unexpected rise of 1.68 million barrels, reaching 104.3 million barrels. Refinery utilisation decreased marginally to 93.4%. Meanwhile, OPEC has revised its 2026 global oil demand growth forecast downwards to 400,000 barrels per day from an earlier estimate of 1.4 million barrels per day at the start of the year. This adjustment marks the sixth consecutive downward revision. However, OPEC anticipates a recovery in demand for 2027, driven by the replenishment of depleted inventories and the realisation of deferred consumption.
Saudi Arabia’s crude production rebounded to 8.372 million barrels per day in September, reflecting an increase of over 2 million barrels per day from August. Meanwhile, Russia’s production rose to 8.43 million barrels per day, as reported by the International Energy Agency, although it continued to lag behind levels from the previous year. Russian crude exports increased to 5.3 million barrels per day, as persistent refinery disruptions continued to limit processing activity. Saudi crude exports rose by 7.9% month-on-month to 4.451 million barrels per day in August, even in the context of reduced production levels.
Crude oil is experiencing renewed buying activity, as evidenced by a 10.79% increase in open interest to 14,786 contracts, coupled with a price rise of Rs. 316. Immediate support is established at Rs. 9,585, succeeded by Rs. 9,375, whereas resistance is identified at Rs. 9,920 and Rs. 10,040. Sustained geopolitical tensions and further supply disruptions could bolster an upward trajectory, while a reduction in supply risks may lead to profit-taking activities. Crude oil prices have increased following Houthi attacks in Saudi Arabia, which have raised concerns regarding energy supply stability.
