Crude oil prices edged lower on Wednesday after four straight sessions of gains, pressured by Venezuela restarting exports and a build-up in US crude and fuel inventories. However, concerns over potential Iranian supply disruptions amid deadly civil unrest continued to support prices.
On the Multi Commodity Exchange, February crude oil contracts eased by ₹22, or 0.4%, to ₹5,507 per barrel, with a trading volume of 11,113 lots, tracking subdued global cues as concerns over excess supply pressured the market.
Meanwhile, on the international front, Brent crude futures slipped 20 cents, or 0.3%, to $65.27 a barrel, while US West Texas Intermediate crude declined 23 cents, or 0.4%, to $60.92 a barrel.
According to analysts, the downturn came as traders pared positions amid sluggish demand in the spot market.
What’s driving crude oil prices?
Venezuela, an OPEC member, has started rolling back oil output cuts imposed during the US embargo, as crude exports are resuming, according to three sources quoted as saying by reuters.
On Monday, two supertankers left Venezuelan waters carrying roughly 1.8 million barrels of crude each. These shipments could mark the first deliveries under a proposed 50-million-barrel supply agreement between Caracas and Washington aimed at restarting exports following the US capture of President Nicolás Maduro, the report added.
Meanwhile, escalating protests in Iran have heightened concerns over potential supply disruptions from the fourth-largest OPEC producer. On Tuesday, US President Donald Trump encouraged Iranians to continue demonstrating and said assistance was forthcoming, though he did not provide details.
On the supply side, an industry report showed that US crude inventories climbed by 5.3 million barrels last week—potentially the largest weekly build in two months if official figures released later Wednesday confirm it, showed a reuters report. The American Petroleum Institute’s data also pointed to increases in gasoline and distillate stocks.
“Crude oil extended its rally and touched a two-month high in international markets amid concerns over potential supply disruptions from Iran. Prices were supported after the US President announced a 25% tariff on countries purchasing Iranian crude, adding to supply worries following fresh US sanctions. Escalating Russia–Ukraine tensions also lent support to oil prices. Additionally, US core CPI for December remained steady at 2.6%, aiding sentiment. However, expectations of resumed Venezuelan supply under US control and a sharp rise in US crude inventories, with API reporting a build of 5.3 million barrels, may cap further upside,” said Rahul Kalantri, VP Commodities, Mehta Equities Ltd.
Crude oil price outlook
According to Suvro Sarkar, an energy analyst at DBS Bank, told reuters that oil prices have already priced in quite a bit of geopolitical risk premium over the last few days in the face of rising turmoil in Iran, compounded by drone attacks in the Black Sea.
“Unless we see further escalation and chances of actual disruption in oil flows, the market could consolidate at these levels and wait for the next moves in a complex world order,” Sarkar was quoted as saying.
He added that large crude and product builds in the US, reported by the American Petroleum Institute (API) late on Tuesday, may also be weighing on prices.
Meanwhile, Kalantri of Mehta Equities said that the crude oil prices are likely to remain volatile.
“We expect crude oil prices to remain volatile in today’s session. Crude oil is having support at $59.50-58.80 and resistance is at $61.20-61.90 in today’s session. In INR crude oil has support at Rs5,430,-5,370 while resistance at Rs5,585-5,645,” he said.
(With inputs from Reuters and PTI)
Disclaimer: This story is for educational purposes only. Please consult with an investment advisor before making any investment decisions.
