DBT Bureau
Pune, 8 Jan 2026
Crude oil prices declined sharply, settling lower by 3.24% at ₹5,041, as markets reacted to rising supply expectations and persistent signs of global oversupply, Kedia Advisory said in its latest market note. Sentiment weakened after former U.S. President Donald Trump indicated that the U.S. had reached an agreement to import up to $2 billion worth of Venezuelan crude, a move that could redirect cargoes earlier destined for China and add fresh barrels to the global market. This development comes despite ongoing logistical constraints on Venezuelan exports since mid-December.
Adding to the bearish outlook, Morgan Stanley projected a possible surplus of up to 3 million barrels per day in the first half of 2026, driven by muted demand growth and increasing supply from both OPEC and non-OPEC producers. Inventory data offered mixed cues: API reported a sharp draw of 2.8 million barrels, while EIA data confirmed a 1.93 million barrel decline in U.S. crude stocks for the week ended December 26. However, total U.S. commercial crude inventories remain comfortably above historical averages at 423 million barrels, capping any upside.
From a broader perspective, the IEA marginally narrowed its projected 2026 surplus, while OPEC+ continued with gradual output increases and maintained a constructive view on medium-term demand. On the technical front, crude remains under selling pressure, with open interest rising 0.88% alongside a price drop of ₹169, indicating fresh short positions.
Market Sentiment:
According to Kedia Advisory, overall market sentiment remains cautiously bearish, with investors closely tracking supply-side developments and policy signals. While inventory draws offer temporary support, expectations of sustained oversupply and rising production are keeping traders defensive, suggesting crude prices may remain volatile in the near term.
