Crude oil concluded with a 2.34% increase at Rs. 8,560, buoyed by a resurgence of geopolitical uncertainty as investors evaluated the possible ramifications of US midterm election outcomes on the trajectory of the US-Israeli conflict with Iran. Significant Republican setbacks have heightened anticipations that the Trump administration may encounter political pressure to seek diplomatic resolutions and steer clear of additional military escalation. Comments from US Vise President JD Vance and Democratic leaders have bolstered expectations regarding potential initiatives aimed at resolving the conflict.
However, the enhancement of Gulf supply has redirected the global oil market toward a surplus, with JPMorgan projecting a surplus of 1.1 million barrels per day in September, expanding to 1.4 million bpd in October. US crude production rose by 11,000 bpd, reaching a historic high of 14.003 million bpd for the week ending October 30. According to the EIA, US crude inventories experienced a decline of 865,000 barrels, reaching a total of 409.8 million barrels, contrary to market expectations which anticipated an increase of 877,000 barrels. Petrol inventories decreased by 222,000 barrels, reaching a total of 209 million barrels. In contrast, distillate stocks experienced a more significant decline of 3.6 million barrels, bringing the total to 99.3 million barrels.
Refinery utilisation rose by 1.7 percentage points to 94.5%, reflecting heightened refinery activity. OPEC has revised its 2026 oil demand growth forecast down to 400,000 bpd from an initial projection of 1.4 million bpd at the start of the year, representing the sixth consecutive downward adjustment. Conversely, the organization has increased its 2027 demand outlook, anticipating inventory rebuilding and postponed consumption. Meanwhile, Russian crude production rose by 65,000 bpd in September to 8.43 million bpd, as reported by the IEA, despite ongoing Ukrainian strikes that disrupted refinery operations and constrained the supply of refined products.
Technically, the market is experiencing short covering, as evidenced by a significant decline in open interest of 25.97% to 7,497 contracts, accompanied by a price increase of Rs. 196. Crude oil is currently establishing a support level at Rs. 8,305. Should prices fall below this threshold, they may test Rs. 8,045. Conversely, resistance is identified at Rs. 8,705, and a sustained movement above this point could lead to an extension toward Rs. 8,850.
