Crude oil futures declined on doubts over recovery in fuel demand and Chinese imports slipping to five months low. The oil was pressured by profit booking amid choppiness in the equity market and the US dollar index.
The crude price recouped earlier losses to trade in red after a gap-down start on weak global cues.
On the MCX, crude oil delivery for June dropped Rs 33, or 0.65 percent, to Rs 5,015 per barrel at 15:44 hours IST with a business turnover of 8,973 lots. The delivery for July slides Rs 30, or 0.59 percent to Rs 5,020 per barrel with a business volume of 772 lots.
The value of June and July’s contracts traded so far is Rs 750.22 crore and Rs 24.04 crore, respectively.
West Texas Intermediate (WTI) crude was down 0.72 percent to $68.73 per barrel, while Brent crude, the London-based international benchmark, fell 0.77 percent to $70.94 per barrel.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Crude oil prices declined on weaker demand outlook following cues from lower Chinese imports which fell to five months low. The traders and investors are waiting for this week’s Iran nuclear talks when global powers will meet Iran on June 10th. We can see some profit booking with resistance at $70 per barrel.”
“China’s Crude imports dipped by 14.6 percent in May’21 (YoY) as maintenance at Chinese refineries amid the stern environmental norms limited the Oil consumption. Low demand from major Oil consuming nation China undermined the market sentiments and pulled the prices lower,” Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd.
“Oil prices rose in the earlier half of yesterday’s trading session following bets on solid demand growth projected by the OPEC. However, investors booked profits after WTI Crude prices touched $70 mark for the first time since October 2018 which dragged the prices lower”, Mallya noted.
Investors await the outcome of this week’s talk between Iran and world powers over a nuclear deal likely to resume on June 10 in Vienna.
The Focus today will be on the US EIA’s monthly outlook which will reflect on the demand-supply situation in wake of the recent Asian outbreak and OPEC’s gradual approach.
The expectations of higher demand during the summer season in the US and Europe amid improvement in virus situation and progress on the vaccination front capped the downside.
The black gold has been trading higher than 20, 50, 100 and 200 days' moving averages but lower than the 5-day moving average on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 60.60, indicating bullish movement in prices.
Crude oil prices are expected to trade sideways to down for the day with resistance at $70 and support at $67 per barrel. MCX Crude oil June has support at Rs 4,930, resistance at Rs 5,060, said Patel.
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