Crude Oil on MCX settled up 0.34% at 2948 taking back some of this week's significant losses on short covering. The outlook for global demand improved a bit as stocks rallied on speculation the Federal Reserve will keep interest rates low through the year. Prices tanked earlier in the week amid signs the global supply glut will worsen before coming under control sometime in 2017. The IEA warned that non-OPEC production is picking up. US oil rig counts are expected to have risen again this week. According to the U.S. Energy Information Administration, distillate inventories including diesel, increased by 4.619 million barrels last week, much higher than expectations for a rise of 1.543 million barrels.
The jump was the biggest weekly build since January and put distillate stocks at six-year seasonal highs. The report also showed that gasoline inventories rose by 567,000 barrels, disappointing expectations for a 343,000-barrel drop. For crude oil inventories, the EIA reported a drop of 559,000 barrels, compared to forecasts for a gain of 3.8 million barrels. Meanwhile, oil traders continued to weigh prospects that major oil producing nations will freeze output to support the market when they meet later this month.
The Organization of the Petroleum Exporting Countries, led by Saudi Arabia and other big Middle East crude exporters, will meet non-OPEC producers led by Russia at informal talks in Algeria between September 26 and 28. An attempt to jointly freeze production levels earlier this year failed after Saudi Arabia backed out over Iran's refusal to take part of the initiative, underscoring the difficulty for political rivals to forge consensus. Technically now Crudeoil is getting support at 2909 and below same could see a test of 2871 level, and resistance is now likely to be seen at 2976, a move above could see prices testing 3005.
--Crude Oil trading range for the day is 2871-3005.
--Crude Oil recovered on short covering after prices dropped that returning Libyan and Nigerian exports would stoke a global supply glut.
--Libya and Nigeria were set to ramp up production, as the end of some conflicts in the countries opened up supply.
--Traders continued to weigh prospects that major oil producing nations will freeze output to support the market when they meet later this month.
Courtesy: Kedia Commodities