Brent crude futures rose 45 cents to $79.04 a barrel, while US West Texas Intermediate crude climbed 48 cents to $73.78, according to news agency Reuters. Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a February 16 expiry, was last trading 0.62 per cent higher at ₹6,122 per bbl, having swung between ₹6,087 and ₹6,160 per bbl during the session, against a previous close of ₹6,084 per barrel.
Also Read: India to outpace China in oil demand growth by 2027: IEA
What’s driving crude prices higher?
-US gasoline stocks fell by 3.15 million barrels last week compared with analysts estimates for a build of 140,000 barrels, according to the US Energy Information Administration (EIA). Distillate stocks also fell 3.2 million barrels in the week to February 2, compared with analysts’ estimates for a fall of 1 million barrels.
-Crude stocks, however, posted a larger-than-expected build of 5.5 million barrels as production recovered after a cold snap while US refiners stepped up maintenance. Analysts had estimated a build of 1.9 million barrels.
-The crude build is mostly the result of low refinery runs – storm and maintenance related, and higher net imports of US crude, but with recovering US oil demand, refined products saw large draws, said UBS analysts.
-The EIA cut on Tuesday its 2024 outlook for domestic oil output growth, putting it far lower than last year’s increase and predicting it would not reach December 2023’s record levels until February 2025.
-This strengthened the case that the oil market will be balanced in 2024, analysts at Haitong Futures said in a note, adding that oil prices should remain in a $10 range around current levels.
-US, Qatari and Egyptian mediators prepared a diplomatic push to bridge differences between Israel and Hamas on a ceasefire plan for Gaza after the Palestinian group responded to a proposal for an extended pause in fighting and hostage releases.
-Traders are following the situation in the Middle East, especially Iranian-backed Houthi rebels’ attacks on shipping in the Red Sea that have disrupted traffic through the Suez Canal, the fastest sea route between Asia and Europe and one that carries nearly 12 per cent of global trade.
-In the longer term, the International Energy Agency (IEA) said on Wednesday that India is expected to be the largest driver of global oil demand growth between 2023 and 2030, narrowly taking the lead from top importer China. That comes as struggling large economies, including China’s, dent confidence in the global oil demand outlook.
Where are prices headed?
Crude oil prices extended gains in a volatile trading session amid profit taking in the dollar index and ongoing tensions in the Red sea. The dollar index slipped from 13-week highs and supported crude oil prices. Crude oil prices also gained after the US retaliated on Iran backed Houthi last week. The Euro zone economic data released this week was also better than expected and supported oil prices, according to analysts.
‘’However, demand concerns from China and higher US oil inventories could limit gains. Technically, crude oil is having support at $72.80–71.90 and resistance at $74.30-75.10. In INR terms, crude oil has support at Rs5,995-5,910 while resistance is at ₹6,170-6,250,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
Here’s your comprehensive 3-minute summary of all the things Finance Minister Nirmala Sitharaman said in her Budget speech: Click to download!
Download The Mint News App to get Daily Market Updates & Live Business News.
Published: 07 Feb 2024, 09:59 PM IST