Crude Oil settled lower by 2.31% at Rs 9,498, influenced by renewed diplomatic efforts aimed at resolving the US-Iran conflict, which have heightened expectations for a reduction in geopolitical tensions and an enhancement of energy supply conditions. Iran’s Supreme Leader Mojtaba Khamenei has urged for a resolution to the ongoing state of neither war nor peace, as diplomatic discussions involving Saudi Arabia, Pakistan, and Turkey indicate possible advancements toward negotiations.
However, the downside remained constrained by ongoing supply risks, as renewed Houthi attacks on Saudi Arabia and escalating security concerns surrounding the Strait of Hormuz posed threats to regional oil flows. Gulf crude exports have experienced a decline for the fourth consecutive week, with shipments transiting through the Strait of Hormuz operating at around 60% of typical levels. US crude inventories decreased by 3.06 million barrels, reaching 412.5 million barrels for the week ending October 16, surpassing forecasts that anticipated a reduction of 820,000 barrels. Petrol inventories decreased by 2.95 million barrels, bringing the total to 205.3 million barrels. In contrast, distillate stocks rose by 1.68 million barrels, reaching 104.3 million barrels, defying forecasts of a decline.
OPEC has revised its 2026 global oil demand growth forecast down to 400,000 barrels per day, a significant reduction from the 1.4 million barrels per day projected at the start of the year. This adjustment represents the sixth consecutive downward revision. Conversely, the organization has increased its outlook for 2027, driven by expectations of inventory rebuilding and a delayed recovery in demand. OPEC has indicated an uptick in production for September within the broader OPEC+ coalition, primarily driven by a significant rise in output from Saudi Arabia. Meanwhile, the International Energy Agency reported that Russian crude production increased by 65,000 barrels per day in September, reaching 8.43 million barrels per day.
However, output continued to lag behind year-ago levels due to persistent refinery disruptions. Technically, the market is experiencing a long unwinding phase, as evidenced by a 3.26% decline in open interest to 14,165 contracts, accompanied by a price decrease of Rs 225. Crude oil exhibits support levels at Rs 9,380 and Rs 9,265, with resistance identified at Rs 9,705. A sustained move above Rs 9,705 could push prices toward Rs 9,915, whereas a break below Rs 9,380 may extend the decline toward Rs 9,265.
