Oil prices fell Tuesday and was hovering near a five-month low, as the market remained focused on concerns about oversupply. Despite OPEC+'s attempts to address the issue by committing to extend and deepen output cuts, the downturn in prices persisted.
West Texas Intermediate was trading 3.55% lower at $68.79 a barrel, while global benchmark Brent fell 3.31% to $73.51, as of 10 p.m. IST.
Over the past seven weeks, oil has experienced a continuous decline, marking the longest downward trend since 2018, and the overall decrease amounts to approximately one-fifth since late September.
This week, traders will be closely observing various market updates. The Energy Information Administration is set to release its short-term outlook on Tuesday, followed by OPEC a day later and the International Energy Agency on Thursday. Additionally, the Federal Reserve's final rate decision for the year is scheduled for Wednesday.
Reliance Securities noted that oil prices have started with gains this week after jobs data last week from the U.S. supported expectations of demand growth.
"Oversupplies market could cap gains. However, prices could continue to exhibit significant volatility ahead of the Fed meeting outcome and OPEC and IEA monthly reports," the note read.
"Rise in U.S. crude oil production, which reached a record high of 13 million bpd could also keep upside limited. Potential economic challenges in China pose a threat to crude oil demand and keep upside-capped," it further said.
"The potential economic challenges in China pose a threat to crude oil demand. However, a correction in the dollar index, following gains in the Japanese yen, provided some support to oil prices at lower levels. Anticipating ongoing volatility, we expect crude oil prices to remain unpredictable in today's session," Rahul Kalantri, VP Commodities, Mehta Equities, said.
"Crude oil finds support in the range of $69.35–68.80, with resistance levels at $71.10-71.70 for the current session. In INR, crude oil has support at Rs 5,740-5,660 and faces resistance at Rs 6,850-5,930," Kalantri added.
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