Crude oil prices rose 2.05%, closing at 6381, as a result of several factors that supported a bullish outlook for the market. A major catalyst was China’s surprise lowering of the reserve requirement for banks in an effort to promote economic recovery.
The action increased market liquidity and raised hopes for a rise in crude oil demand to coincide with the predicted economic recovery. Additionally, the significant decline in the United States crude oil inventories supported the rising trend in crude oil prices.
For the week ending January 19, official statistics from the United States Energy Information Administration showed an astounding drop of 9.2 million barrels, exceeding market projections of a 2.2 million barrel cuts.
This unanticipated withdrawal came one week after a 2.5 million barrel drop. The data from the American Petroleum Institute also showed a significant drop of 6.7 million barrels. Which surprised the market, which had been expecting a more moderate decline of 3 million barrels.
In line with OPEC’s recent announcement, the International Energy Agency (IEA) declared that it would accelerate the release of its initial oil demand forecast for 2025. Considering how dynamic the oil market is, both organisations plan to release updated insights ahead of schedule.
From a technical perspective, the crude oil market showed evidence of short covering. As open interest dropped by -0.04% and settled at 11212.
Oil Prices have experienced a 128-rupee increase, but support still exists at 6263. A breach at that level could initiate a test of 6144. On the other hand, analysts anticipate resistance at 6446; a breakout at that point could enable prices to reach 6510.