Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
International and domestic crude oil prices remained range bound this week.
However, oil could end weak for the first time in over 5 weeks.
Prices started on a negative note and remained slightly weak in the early half of the week after touching multi-year highs weighed down by weak data from the U.S. and China tempering early enthusiasm about demand.
Additionally, U.S. production from shale basins is expected to rise in November, according to a monthly U.S. report also weighed on market sentiment.
Total oil output from seven major shale formations was expected to rise by 76,000 bpd to 8.29 million bpd in the month.
However, after a brief fall prices found support as an energy supply crunch continued across the globe, while falling temperatures in China revived concerns over whether the world's biggest energy consumer can meet domestic heating needs.
Additionally, U.S. crude and fuel inventories tightened further and lent support.
U.S. crude stocks fell by 431,000 barrels in the week to Oct. 15 to 426.5 million barrels while U.S. gasoline stocks fell by a more-than-expected 5.4 million barrels in the week to 217.7 million barrels pointed to strong demand.
Additionally, overall product supplied rebounded in the most recent week, with the four-week average of supply from refineries hitting 20.9 million barrels per day, less than 1% from 2019 levels.
Moreover, U.S. stocks at the Cushing, Oklahoma delivery hub fell by 2.3 million barrels to 31.2 million barrels. their lowest level since October 2018, pointing to tightness in the market that may take some time to improve.
International crude oil prices could extend some weakness into next week amid profit taking and forecast of a warm winter in the U.S.
According to a National Oceanic and Atmospheric Administration released this week, winter weather in much of the United States is expected to be warmer than average which could hurt demand.
Traders who had set $86 as their selling threshold took the opportunity to already pocket some profit.
Oil could also under pressure from a drop-in coal and natural gas prices.
In China, coal fell 11%, extending losses this week since Beijing signalled it might intervene to cool the market.
Markets could look to inventory data next week and another draw will cap downside in prices.
Technically, Brent December contract immediate resistance zone is at $86.74-87.94 and a trade above could push prices to $92.90 levels. On the downside, immediate support is at $82.45 and $80.20.
Technically, if WTI Crude Oil trades below $84.00 level, it could see downside momentum up the support zones at $82.00-$80.50 levels. A trade above would push prices to the resistance zones at $84.77-$86.80 levels.
Domestically, if MCX Crude Oil November trades below 6350 level, it could see a Bearish momentum up to the support zones at 6180-5900 levels. A trade above would push prices to the resistance zones at 6330-6430 levels.
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