Introduction: The crude oil market is never dull, and right now, it’s facing a mix of opportunities and risks. On one hand, OPEC+ is carefully managing supply, gradually increasing output while keeping an eye on market stability. On the other, the global economy faces potential headwinds as U.S. trade policies introduce new uncertainties. Add to that Russia’s financial strain and Canada’s pipeline issues, and you’ve got a market full of conflicting signals.
Oil prices have reacted to these developments, falling recently as concerns about global demand take center stage. But with supply risks still in play, the question is: where do prices go from here? In this report, we’ll break down the key factors driving the market, explore the latest price trends, and provide insights to help navigate the weeks ahead.
Macroeconomic and Geopolitical Influences on Oil
OPEC+ Production Adjustments
- OPEC+ has announced a measured increase in crude oil production, adding 135,000 barrels per day in May.
- This adjustment is part of the broader plan to gradually unwind the 2.2 million barrels per day supply cut implemented earlier.
- However, overproduction by Kazakhstan has raised concerns within the group, prompting discussions on compensatory measures.
Impact of U.S. Tariffs on Market Sentiment
- The recent introduction of U.S. trade tariffs has sparked concerns about global economic growth, which could reduce oil demand.
- Although crude oil and refined products remain exempt from direct tariffs, broader economic uncertainties have led to a selloff in oil markets.
- Brent crude has declined by over 5%, trading around $71 per barrel, while WTI has dropped to approximately $69.70.
Russia’s Declining Oil Revenues
- Russia’s oil and gas revenues fell by 17% in March, reflecting the impact of ongoing sanctions and shifting trade flows.
- Lower revenue could lead to potential production cuts in the coming months, affecting global supply.
Canada’s Trans Mountain Pipeline Challenges
- The recently expanded Trans Mountain pipeline has revised its crude shipment forecasts downward due to slower-than-expected utilization.
- This development raises concerns about North American supply stability and pipeline profitability.
Price Forecast: What the Charts Are Telling Us
Crude oil prices saw a sharp 6.33% decline, nearing the lower circuit due to OPEC+ adjustments, geopolitical tensions, and weak global demand. This drop triggered heavy selling, breaking key support levels and strengthening the bearish outlook.
The key support zone for crude oil lies between ₹5,620 – ₹5,700, representing a strong demand area. Selling within this range is not advisable, as buyers may step in to defend these levels.
The overall trend remains bearish, given that crude has broken multiple major swing levels. A sell-on-rise strategy is preferred rather than selling at support.
Key support levels at ₹5,950, ₹5,900, and ₹5,850 have already been breached. If crude breaks below ₹5,680, we may witness further downside pressure.
On the upside, the immediate resistance zone is at ₹6,060 – ₹5,940 – ₹5,800, which could act as a selling opportunity in case of a price rebound.
Conclusion:
Crude oil remains at the center of global market fluctuations, with recent news triggering a sharp decline and increasing uncertainty. Economic policies, supply shifts, and geopolitical tensions continue to shape price movements, making it essential for investors and businesses to stay vigilant.
While short-term volatility may persist, long-term market direction will depend on global demand recovery, policy decisions, and production adjustments. A balanced approach, keeping an eye on key developments, will be crucial for making informed decisions in this rapidly changing environment.
Until then, Happy Trading!
Commodity Samachar Securities
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