Crude oil futures traded lower on Wednesday morning as an industry report showed an increase in inventories in the US for the week ended October 18.

At 9.56 am on Wednesday, December Brent oil futures were at $75.94, lower by 0.13 per cent, and December crude oil futures on WTI (West Texas Intermediate) were at $71.64, down by 0.14 per cent.

November crude oil futures were trading at ₹6,042 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹6040, up by 0.03 per cent. December futures were trading at ₹6,024 against the previous close of ₹6,028, down by 0.07 per cent.

US inventory spike

According to industry body American Petroleum Institute (API), crude oil inventories in the US increased by 1.64 million barrels for the week ended October 18. Market was expecting it to increase by around 0.7 million barrels. The market is waiting for release of the official data on crude oil inventories from the US EIA (Energy Information Administration) later on Wednesday.

ING Think’s Commodities Feed for Wednesday said oil prices finished stronger on Tuesday on the back of little fresh developments. Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said ICE Brent settled almost 2.4 per cent higher on the day, taking it back above $76 a barrel.

Prices, however, were under some pressure in early morning trading on Wednesday. Possibly, Tuesday’s strength was in response to the lack of any outcome from the visit of the US Secretary of State, Antony Blinken, to Israel.

“There had been hopes that following the killing of Hamas leader, Yahya Sinwar, there could be some de-escalation in the war. On top of this, the market continues to wait for Israel’s response to Iran’s missile attack. The uncertainty around how this plays out would leave speculators hesitant to be too short the market, something speculators had been before this most recent escalation, due to demand concerns and a bearish 2025 outlook,” they said.

Meanwhile, Goldman Sachs said that oil prices are likely to average $76 a barrel in 2025 based on a moderate crude surplus and spare capacity among major producers, with concerns easing over a potential disruption in Iranian supply

In a note on Tuesday, it said: “Overall, we still see the medium-term risks to our $70-85 a barrel range as two-sided but skewed moderately to the downside on net as downside price risks from high spare capacity and potentially broader trade tariffs outweigh upside price.”

The geopolitical risk premium is limited, as Israel-Iran tensions have not affected oil supply from the region and as spare capacity is high among producers in OPEC+, it said.

ING Think’s Commodities Feed said that the Chinese government increased the 2025 crude oil import quota for private refiners by 6 per cent year-on-year to 257 million tonnes (a little over 5.1 million barrels a day), after keeping it unchanged for four consecutive years. The higher quota comes as new refining capacity ramps up, while quotas could still be adjusted depending on demand and capacity, it said.

October manthaoil futures were trading at ₹907.50 on MCX during the initial hour of trading on Wednesday against the previous close of ₹900.20, up by 0.81 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), December cotton wash oil contracts were trading at ₹1168 in the initial hour of trading on Wednesday against the previous close of ₹1160, up by 0.62 per cent.

November jeera futures were trading at ₹25060 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹25310, down by 0.99 per cent.

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