Crude Oil Dropped As Markets Don’t Appear Too Worried About Oil Supply

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Crude Oil Dropped As Markets Don’t Appear Too Worried About Oil Supply

Crude oil prices declined slightly by -0.17% to settle at 6568, as the market showed little concern about immediate supply disruptions. US Energy Information Administration (EIA) data revealed that US crude stockpiles fell by 2.508 million barrels last week, marking the second consecutive weekly decline and surpassing expectations of a 1.362 million barrel draw. This data, alongside softer US consumer inflation, has bolstered expectations for potential rate cuts from the Federal Reserve, which could in turn stimulate economic growth and energy demand. Despite these positive indicators for demand, the International Energy Agency (IEA) revised its global demand growth forecast for this year downward by 140,000 barrels per day to 1.1 million barrels per day. 

Meanwhile, OPEC's latest report indicated that its member countries exceeded their production cap by 568,000 barrels per day in April, while maintaining robust demand projections of 2.25 million barrels per day for 2024 and 1.85 million barrels per day for 2025. Additionally, Azerbaijan's oil production decreased slightly to 476,000 barrels per day in April from 481,000 barrels per day in March. In the US, the EIA's monthly Drilling Productivity Report projected that oil output from the top shale-producing regions would rise to 9.85 million barrels per day in June, the highest level in six months.  

Technically, the crude oil market is experiencing fresh selling pressure, with open interest rising by 4.03% to 5786 contracts while prices fell by 11 rupees. Crude oil is currently supported at 6507, with further support at 6445. On the upside, resistance is expected at 6612, and surpassing this level could see prices testing 6655.

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