The prices of crude oil fell by 0.72% to settle at $6,579, indicating that the market does not currently anticipate any major disruptions to the supply of oil.
US EIA recently released data showing that US crude stockpiles fell for a second week in a row, by 2.508 million barrels, exceeding projections of a draw of 1.362 million barrels.
This drop in stockpiles suggests a constricting supply, which normally keeps prices high. The anticipation of Federal Reserve rate cuts have increased due to data from April showing a slowdown in the United States consumer inflation.
This could spur economic growth and ultimately increase demand for energy. IEA has revised down its forecast for global demand growth in 2024 by 140,000 barrels per day to 1.1 million barrels per day, despite this possible boost.
This adjustment points to a more muted perspective for oil demand growth. According to the Organisation of the Petroleum Exporting Countries (OPEC), member countries’ production limits were surpassed by 568,000 barrels per day in April.
In spite of this, OPEC continues to confidently project future demand growth, maintaining strong demand estimates of 2.25 million barrels per day in 2024 and 1.85 million barrels per day in 2025.
US oil output from top shale-producing regions is predict to increase, reaching 9.85 million barrels per day in June—the highest level in six months, according to the EIA.
From a technical perspective, crude oil market is under renewed selling pressure. Prices have dropped by 48 rupees, but open interest has increased significantly by 19.54% to 5,562.
Crude oil prices is currently finding support at 6,538, and a decline below it could lead to a test of 6,497. Resistance on the upside is see at 6,651, and a move above it could lead prices up to 6,723.