Crude oil managed to eke out a marginal gain of 0.01% yesterday, settling at 6897, following Iran's efforts to downplay reported Israeli attacks, signalling a potential de-escalation of tensions in the Middle East. However, the market remained sensitive to geopolitical developments, especially as U.S. lawmakers proposed sanctions on Iran's oil exports as part of a Ukraine aid package. This move could affect global oil trade, particularly involving Chinese financial institutions. Despite these uncertainties, bullish sentiments prevailed as Goldman Sachs (NYSE:GS) and Commerzbank (ETR:CBKG) raised their Brent crude forecasts, citing geopolitical tensions, rising demand, and OPEC+'s commitment to restrained supply.
However, demand-side concerns emerged due to weak March economic data from China, the world's top crude importer, and fears of delayed interest rate cuts by the US Federal Reserve. Furthermore, the reimposition of sanctions on Venezuelan oil by the US and potential new restrictions on Iranian oil by the EU added to the market's complexity. Meanwhile, the US Energy Information Administration (EIA) reported an anticipated increase in oil output from top shale-producing regions in May, reaching the highest level in five months. This rise, particularly in the Permian basin, could offset any supply constraints.
From a technical perspective, fresh buying activity was observed, with open interest increasing by 15.84% to settle at 4089, despite a minimal price increase of 1 rupee. Crude oil is currently finding support at 6767, with a potential downside to 6636, while resistance is anticipated at 7048, with a breakout possibly leading to testing the 7198 level.