Crude oil yesterday settled down by -1.18% at 8459 as hopes of a diplomatic breakthrough in the Middle East eased concerns over supply disruptions, following US President Donald Trump discussing de-escalation efforts with Qatar’s Emir Sheikh Tamim bin Hamad Al-Thani and Tehran reportedly reviewing proposals concerning its nuclear program. While a potential resolution could facilitate increased exports, considerable challenges persist as Iran insists on the removal of the US naval blockade, the alleviation of sanctions, and the unfreezing of assets prior to the reopening of the Strait of Hormuz, in addition to the ongoing attacks on vessels, which are nearing record levels according to UKMTO data.
Meanwhile, JPMorgan estimates that the market returned to a surplus of 1.1 million barrels per day in September, which widened to 1.4 million bpd in October. Additionally, US crude production increased by 11,000 barrels per day, reaching a record 14.003 million bpd in the week ended October 30. Fundamental data from the Energy Information Administration indicated a decrease in US crude inventories by 865,000 barrels, bringing the total to 409.8 million barrels, contrary to expectations for an increase. Additionally, Cushing storage experienced a rise of 280,000 barrels, while refinery crude runs saw an uptick of 199,000 bpd. Utilisation rates also improved, climbing by 1.7 percentage points to reach 94.5%. US petrol stocks decreased by 222,000 barrels, bringing the total to 209 million barrels. Distillate stockpiles experienced a decline of 3.6 million barrels, now standing at 99.3 million barrels.
Meanwhile, net US crude imports increased by 1.18 million barrels per day. Concurrently, OPEC has increased its 2027 world oil demand growth forecast to replenish depleted inventories, while simultaneously lowering its 2026 growth forecast for the sixth consecutive time. Additionally, an OPEC+ production surge in September was reported, primarily driven by Saudi Arabia, which produced 8.372 million bpd. Secretary General Haitham Al Ghais also indicated that this year’s demand growth forecast has been adjusted downward to 400,000 bpd. The IEA indicated that Russian crude production rose by 65,000 bpd in September, reaching 8.43 million bpd, which remains 870,000 bpd below levels from the previous year.
Additionally, Russian crude exports increased by 60,000 bpd to 5.3 million bpd, while Kazakhstan’s output remained stable at 1.9 million bpd. This stands in contrast to OPEC’s report, which noted a decline in Russian production of 38,000 bpd to 8.643 million bpd. From a technical perspective, the market is experiencing a phase of long unwinding, evidenced by a 0.15% decrease in open interest, which has settled at 7486. This coincides with a price decline of 101 rupees. Crude oil is currently finding support at 8300, with a potential breach below this level likely to test the 8145 mark. Conversely, resistance is identified at 8680, and a movement above this threshold could lead to a test of 8900.
