Support for MCX Crude Oct at Rs 3865: Kotak Commodity

Kotak Commodity has come out with its report on Crude Oil.

• NYMEX crude trades weaker Monday extending last week's 9.2% slide
• Weakness in equity markets and strength in US dollar weighs on crude oil
• No quick decision on payment for Greece, says German Deputy Finance Minister
• Failure to combat Greek default would result in cascading default, bank runs and catastrophic risk, says US Treasury Secretary
• Asian equity markets are trading weaker today despite gains in US markets on Friday
• The US dollar index trades higher today extending last week's rally
• ICE Brent crude Nov contract ended at premium of $24.12/bbl on Friday as against $24.98/bbl a day earlier
• Focus today on German IFO and US new home sales and Dallas manufacturing

Market Analysis: NYMEX crude gained $1 earlier today to hit a high of $80.85/bbl but shed all the gain to trade weaker near $79/bbl. Crude oil noted mixed trade today after a sharp decline last week. Crude oil plunged 9.2% last week marking its first decline in five weeks. Crude oil trades weaker weighed down by strength in US dollar and weakness in equity markets. Meanwhile dwindling confidence about major economies has also fuelled demand concerns.

Crude Oil plunged sharply last week amid a selloff across commodity and equity markets.

Reuters/CRB commodities index fell 8.4% last week to 301.87 points. US DJIA index plunged 6.4% last week, biggest weekly fall since Oct 2008.

Crude oil has moved in sync with equity markets in past few days and this trend may persist in the near term. Global financial markets are under selling pressure amid concerns about health of US and Euro-zone economies. Concerns about US economy are high following Fed's downbeat assessment for the economy. Meanwhile concerns about Euro-zone economies are high amid uncertainty about additional financing for Greece.

Asian equity markets trades weaker today extending last week's sell-off. US DJIA index showed some recovery on Friday however the recovery is not visible in Asian markets today.

Outlook:
Crude Oil- MCX Crude may note some decline tracking cues from international exchange. NYMEX crude trades weaker weighed down by strength in the US dollar and weakness in equity markets. Equity markets are under pressure amid concerns about health of US and Euro-zone economies. Crude oil is unlikely to see recovery unless equity markets stabilize. Focus today will be on German IFO and US new home sales and Dallas manufacturing index. Mixed data could add to negative sentiment in the market. Support for MCX Crude Oct contract is seen at Rs.3865 while Resistance is seen at Rs 4050.

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