Crude oil prices dropped on Tuesday, erasing the gains made on Monday amid reports of advancements in Ukraine peace negotiations. A peace agreement between Russia and Ukraine could lead to greater supplies, which offset a positive sentiment in the broader markets.
Oil prices have dropped this year, with futures on track for a fourth consecutive monthly decline in November, marking the longest stretch of losses since 2023.
On Tuesday, crude oil prices traded flat on Multi Commodity Exchange (MCX). MCX crude oil price was trading at ₹5,236 per barrel. It hit an intraday high of ₹5,254 level, and an intraday low of ₹5,229. In the global markets, Brent crude oil price rose 0.50% to $63.06 a barrel, while US West Texas Intermediate (WTI) futures climbed 0.46% to $58.57.
The decline in crude prices occurred even as Asian stocks mirrored gains seen on Wall Street, fueled by expectations of additional interest rate reductions from the Federal Reserve.
Both crude benchmarks gained 1.3% on Monday. Analysts suggested that crude oil prices bounced back from one-month lows on Monday, fueled by a widespread risk-on sentiment due to increasing hopes for a Federal Reserve rate cut in December.
Further, experts believed that oil prices rebounded even in light of the agreement between the US and Ukraine to revise the draft of the Russia-Ukraine peace deal. Additionally, the Chinese stimulus initiative aimed at boosting its housing market is providing support for oil prices at lower levels.
Factors behind falling crude oil prices
Concerns about oversupply: Increased non-OPEC production, particularly from US shale, along with indications of sufficient inventories, have limited price increases and pushed prices downwards.
Ukraine–Russia peace talks: Fluctuating optimism regarding a potential agreement has sometimes lowered the geopolitical risk premium, contributing to downward pressure when progress in talks appears to occur.
The peace agreement between Russia and Ukraine could lead to a reduction in sanctions against Russia, potentially limiting the upward movement of crude oil prices.
Weak demand: Worries about slower global economic growth and weak demand for refined products, especially in Europe and certain parts of Asia, have made bullish investors more cautious.
Crude Oil Price Outlook
Rahul Kalantri, VP Commodities, Mehta Equities Ltd expects crude oil prices to remain volatile.
“Crude oil is having support at $57.90-57.40 and resistance is at $59.10-59.60 in today’s session. In INR crude oil has support at Rs5,175,-5,120 while resistance at ₹5,300-5,375,” Kalantri said.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
