Crude oil prices dropped by -2% to settle at 6,119 as supply disruption concerns eased following reports that Israel is unlikely to target Iranian oil facilities, focusing instead on military installations. Additionally, concerns about Chinese economic growth and a potential demand slowdown also weighed on prices. China's National Development and Reform Commission pledged to implement measures to support the economy, but the lack of concrete details disappointed the market, particularly given China's ongoing housing crisis, weak consumption, and rising local government debt. Goldman Sachs (NYSE:GS) reported a slight decrease in geopolitical risk premiums in the oil market, following a sharp rise last week.
Despite this, Goldman Sachs still anticipates a potential $10-$20 per barrel increase for Brent in the event of disruptions to Iranian oil production. Meanwhile, U.S. crude oil inventories increased by 5.81 million barrels last week, the highest in over five months, exceeding expectations of a 2 million barrel increase. However, gasoline stocks fell sharply by 6.3 million barrels, more than the forecasted 1.1 million decline, while distillate inventories dropped by 3.1 million barrels. The U.S. Energy Information Administration (EIA) revised its global oil demand growth forecasts downward, citing weakening economic activity in China and North America. It now expects world oil demand to grow by 1.2 million barrels per day (bpd) in 2024, about 300,000 bpd below previous forecasts.
Technically, crude oil is under long liquidation, with open interest down by -2.41% to settle at 11,949 contracts, while prices fell by 125 rupees. Crude oil has support at 6,002, with a potential test of 5,885 if breached. Resistance is seen at 6,246, and a break above could lead to prices testing at 6,373.