Crude Oil Futures Rise on Strong Spot Demand and Global Cues
Crude oil futures traded higher on Thursday, supported by firm spot demand and positive global cues. On the Multi Commodity Exchange (MCX), the October crude oil futures contract was up by 0.45 per cent, trading at Rs 6,400 per barrel, against the previous close of Rs 6,371.
Market participants attributed the uptick to healthy demand from physical buyers and a recovery in international benchmarks. Brent crude oil futures on the Intercontinental Exchange (ICE) rose 0.3 per cent to $72.50 per barrel, while West Texas Intermediate (WTI) crude on the New York Mercantile Exchange (NYMEX) gained 0.4 per cent to $68.90 per barrel.
Factors Supporting Prices
Analysts pointed to several factors supporting the upward momentum. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) have maintained production cuts, which continue to tighten global supply. Additionally, geopolitical tensions in key oil-producing regions have added a risk premium to prices.
On the demand side, expectations of a strong economic recovery in major economies, particularly in the United States and China, have boosted sentiment. The US Energy Information Administration (EIA) reported a larger-than-expected draw in crude inventories, indicating robust consumption.
Domestic Demand and Outlook
In the domestic market, demand from refineries and other end-users remains steady, with the upcoming festive season likely to boost consumption further. Traders expect prices to remain range-bound with a positive bias, as long as supply constraints persist.
However, some caution persists due to the potential impact of interest rate hikes by central banks, which could slow economic growth and curb oil demand. The US Federal Reserve's recent hawkish stance has raised concerns about a slowdown in global economic activity.
Technically, crude oil futures are facing resistance at Rs 6,450 per barrel, while support is seen at Rs 6,300 per barrel. A breakout above the resistance level could push prices towards Rs 6,550 per barrel.
