Crude oil futures traded higher on Tuesday as spot demand improved and global markets showed strength. Analysts attribute the rise to increased buying from refineries and a positive outlook for fuel consumption.
Market Movements
On the Multi Commodity Exchange (MCX), crude oil for November delivery gained 0.45% to trade at Rs 4,876 per barrel, while the December contract rose 0.38% to Rs 4,897 per barrel. The uptick followed a firm trend in global markets, where benchmark Brent crude crossed the $82 per barrel mark.
Factors Driving the Rally
Spot demand from domestic refineries picked up as they restocked inventories ahead of the winter season. Additionally, geopolitical tensions in the Middle East and production cuts by OPEC+ continued to support prices. Analysts noted that the market remains sensitive to supply disruptions, with any escalation in conflicts potentially pushing prices higher.
Global Context
Internationally, Brent crude futures for January delivery rose 0.6% to $82.15 a barrel, while US West Texas Intermediate (WTI) crude for December gained 0.5% to $78.20. The gains were fueled by optimism over demand recovery in China and the US, the world's top two oil consumers.
Outlook
Market participants expect crude prices to remain volatile in the near term, with the focus on upcoming OPEC+ meetings and inventory data from the US Energy Information Administration (EIA). A weaker dollar also provided support, making oil cheaper for holders of other currencies.
Investment Perspective
Analysts advise caution, as the rally may be capped by concerns over slowing global economic growth and potential interest rate hikes by central banks. However, for now, the sentiment remains bullish, with spot demand providing a floor to prices.
