Crude Oil settled 0.91% lower at Rs. 9,709 as hopes of renewed diplomatic engagement between the US and Iran alleviated concerns regarding potential supply disruptions in the Middle East. US Vise President JD Vance reportedly sought to revive peace negotiations with Tehran, while Iran indicated its willingness to continue diplomatic efforts, raising hopes of a possible de-escalation. However, concerns regarding escalated assaults by Yemen’s Iran-aligned Houthis and the potential for additional US measures against Iran in the aftermath of the November 3 midterm elections constrained the downside.
UBS has adjusted its end-2026 forecast upward to $110 per barrel from a previous estimate of $100, attributing this revision to ongoing geopolitical uncertainty and the possibility of disruptions in Gulf production. Meanwhile, US crude inventories experienced a decline of 1.9 million barrels, reaching a total of 410.6 million barrels for the week ending October 23, contrary to expectations of a slight increase. Additionally, Cushing stocks decreased by 624,000 barrels. Distillate inventories experienced a reduction of 1.5 million barrels, while petrol stocks saw an increase of 3.9 million barrels, surpassing market expectations. Refinery utilisation decreased by 0.6 percentage points, settling at 92.8%.
On the supply side, OPEC has revised its 2026 global oil demand growth forecast for the sixth consecutive time, now estimating an increase of 400,000 barrels per day, down from the 1.4 million barrels per day projected at the beginning of the year. However, the organization has raised its 2027 outlook, anticipating a recovery in demand and a rebuilding of inventories. In September, OPEC+ saw an uptick in production, primarily driven by a notable increase in output from Saudi Arabia. Meanwhile, the International Energy Agency reported that Russian crude production increased by 65,000 barrels per day to 8.43 million barrels per day in September.
However, it remained below year-ago levels due to ongoing disruptions to refining operations. Technically, the market is experiencing a long unwinding phase, evidenced by a decline in open interest of 18.47% to 13,713 contracts, alongside a price decrease of Rs. 89. Crude oil is presently encountering support at Rs. 9,565, with additional support at Rs. 9,420, while resistance is established at Rs. 9,795. A sustained move above this level could push prices toward Rs. 9,880.
