Crude Check: Oil Prices Continue to Weaken Amid Uncertain Market Trends

Crude oil prices further extended their downtrend over the past week, with Brent crude oil futures on the Intercontinental Exchange (ICE) closing at $80.60 per barrel—a decline of 7.7%. In the domestic market, crude oil futures fell to ₹7,262 per barrel, marking an 8.9% drop. Key support levels were breached, driving prices to a three-month low, which indicates persistent downward momentum. Despite a brief recovery to $80.60 on Brent futures after hitting an intra-week low of $76.54, the overall trend remains bearish.

The downturn in crude oil prices is primarily attributed to a confluence of factors including shifting demand patterns, global geopolitical tensions, and concerns over economic growth. As countries grapple with inflationary pressures, demand for oil has witnessed a deceleration, particularly from major consumers. Additionally, ongoing geopolitical uncertainties, notably in energy-producing regions, have prompted shifts in market sentiment. These dynamics have exerted pressure on prices, invalidating key support levels and suggesting a fragility in the market’s foundation.

Short-term outlook for traders suggests a cautious approach, as the bearish trend remains the prevailing sentiment. There is potential for a corrective rise that could push prices back to the $86-$92 resistance band on Brent. However, any upward movements may attract fresh selling pressure, leading to further declines. For traders, the recommendation would be to avoid initiating new positions until a clear breakout above resistance levels, specifically above ₹8,200 in the domestic market, is observed. A strategic short position could be considered if prices approach ₹7,900, with prudent stop-loss management in place to mitigate risks.

Source: Market Source

(Expert Note: This report was independently prepared by the Wealthova Commodities team.)