Crude oil prices may touch $90-92 per barrel next week
What's the story
Crude oil prices are expected to remain under pressure next week, owing to expectations of ample supply and rising inventories. However, geopolitical tensions between the US and Iran could trigger volatility in the market. Ajit Mishra, SVP of Research at Religare Broking, said, "Brent crude oil could potentially test $90-92 per barrel in overseas trade."
Market volatility
US-Iran tensions continue, but supply disruption fears are easing
The ongoing tensions between the US and Iran continue to be a major concern for global energy supplies.
Iran recently claimed it launched six drones targeting a US air-defense radar installation at Bahrain's Al-Rifaa base.
Analysts believe that the Strait of Hormuz remains a potential trigger for supply disruptions, but the immediate shortage premium is gradually unwinding.
Market performance
Crude oil prices fall on MCX
On the Multi Commodity Exchange, crude oil futures for November delivery fell ₹185 or 2.16%, to settle at ₹8,369 per barrel.
The December contract also declined by ₹196 or 2.31%, to settle at ₹8,282 per barrel.
This decline indicates a shift from a market driven by geopolitical risks to one dictated by supply-demand fundamentals.
International markets
Prices decline in international market as well
The decline in crude oil prices wasn't limited to the Indian market.
Brent crude futures for January delivery slipped $2.48 or 2.52%, during the week to close at $95.84 per barrel on the Intercontinental Exchange (ICE).
West Texas Intermediate (WTI), the US benchmark, also fell by $2.27 or 2.5%, finishing at $88.56 per barrel on the New York Mercantile Exchange (NYMEX).
Supply dynamics
Factors contributing to crude oil's 2nd consecutive weekly decline
Mishra noted that Brent has slipped below $96 per barrel for a second consecutive weekly decline.
This is mainly due to higher OPEC+ production, a larger-than-expected build-up in US inventories, and expectations of global supply surplus.
In October alone, OPEC+ output rose by nearly 1.96 million barrels per day while US crude inventories increased by 4.66 million barrels.