Crude oil settled 0.35% higher at Rs. 9,104, buoyed by escalating geopolitical tensions following the United States’ strike on Iran’s Qeshm Island. An Iranian official’s remarks suggested that a resolution to the conflict was still far off, heightening concerns regarding potential disruptions to global energy supplies. Supply-side concerns were further underscored by the decline in US Strategic Petroleum Reserve inventories, which have reached 282.2 million barrels, marking the lowest level since October 1982. This decrease follows recent drawdowns associated with a 172 million-barrel release program. Goldman Sachs has adjusted its Brent crude price forecast for December, raising it to $105 per barrel from a previous estimate of $90.
Additionally, the firm has increased its average forecast for 2027 to $88, attributing these changes to ongoing supply risks. Meanwhile, Libya’s National Oil Corporation has reported yet another disruption to crude flows, following an incident where an armed group closed a valve on the Hamada pipeline that supplies the Zawiya refinery. US crude inventories decreased by 1.9 million barrels to 410.6 million barrels in the week ending October 23, contrasting with market expectations of a 15,000-barrel rise, while Cushing stocks experienced a decline of 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 projections.
On the demand front, OPEC has revised its 2026 global oil demand growth forecast downwards to 400,000 barrels per day from a previous estimate of 1.4 million barrels per day, marking the sixth consecutive downward adjustment. However, it has raised its 2027 outlook, anticipating inventory rebuilding and a delayed recovery in demand. Meanwhile, the International Energy Agency reported that Russian crude production increased by 65,000 barrels per day in September to 8.43 million barrels per day, although it remained below year-ago levels amid ongoing refining disruptions.
Technically, the market is experiencing short covering, evidenced by a significant decline in open interest of 12.73% to 9,930 contracts, alongside a price increase of Rs. 32, suggesting the liquidation of existing short positions. Crude oil is presently encountering support at Rs. 8,860, beneath which prices may challenge Rs. 8,615. On the upside, resistance is positioned at Rs. 9,360, and a sustained movement above this threshold could lead to further gains toward Rs. 9,615.
