 "Crude Oil prices likely to trade higher; WTI Crude may test $80-mark")
Crude oil prices recovered sharply from three months low level after data showed the US crude stockpiles fell last week as refiners slowly ramped up output ahead of the summer driving season. WTI crude recovered from lows of $76.91 to settle-up by 0.8% at $78.99 a barrel. The recent correction in prices is fuelled by the hopes of a ceasefire in Gaza have put some downward pressure on oil prices in recent trading sessions and has wiped out the risk premiums.
EIA Weekly inventory data
US weekly crude inventories fell by 1.4 million barrels to 459.5 million barrels last week, government data showed, compared with a 1.1 million-barrel, Refinery utilization rates rose by 1 per cent to 88.5 per cent of total capacity, but was still lower than rates of 91 per cent a year ago and US gasoline demands remains around 9 mbpd. Gasoline demand still indicating weakness at gas station as inventories surged 0.9 mb, and Distillates showed a build-up 0.56mb. US daily production stood around 13.2 mbpd. overall inventory report could see some moderation in prices later in the week.
EIA revised outlook
In its monthly report for April the Energy Information Agency (EIA) revised down global oil and liquid fuels demand to grow by 920,000 barrels per day (bpd) this year to 102.84 million bpd, slightly smaller than the 950,000-bpd, and total world crude oil and liquid fuels production estimated to rise by 970,000 bpd to 102.76 million bpd this year, compared with its previous estimate of an 850,000-bpd increase. US will continue to be the leading crude oil producer at 13.20 mbpd, slightly down from 13.21 mbpd from the earlier forecast. But for 2025 the agency expects a slightly bigger record high of 13.73 million bpd, up from the prior forecast of 13.72 million bpd.
India oil consumption
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Indian consumption of crude oil rose to 19.86 million tons or 4.85 mbpd in April 2024 from 18.71 million tons of April 2023, but dropped 5.8% m/m basis from 21.09 million tons in March. Fuel oil use decreased by more than 16% y/y in April. India is expected to grow at 6.5% in 2024, which is among the fastest growing economy among major peers.
Outlook
Crude oil corrected some 10 per cent over the past five weeks, which may prompt some US drillers to cut back on oil production in shale basins, while some elements of risk persist in the Gaza-Israel, that have yet to be resolved and could keeps the door open for a potential escalation in Rafah. Crude oils 100 day moving average is currently at $78.22, and prices settled above the MA on Wednesday, The 200-day MA is at $80.06, and would be the next key target. Prices should broadly trade with upward bias in the range of $77-$80/b.
WTI Crude oil :Support: $76.90, Resistance : $80.60
MCX Crude June: Support : Rs 6,455 , Resistance : Rs 6,660.
Disclaimer: Mohammed Imran - Research Analyst, Sharekhan by BNP Paribas, views expressed are personal.