Crude oil falls 0.94% to Rs 4,201 per barrel on weak demand outlook

Crude oil

Crude oil futures dropped to Rs 4,201 per barrel on February 12 as participants increased their short positions as seen by the open interest. Crude oil weakened after a gap down open as dollar recovers.

Crude oil dropped after both OPEC and the International Energy Agency said renewed lockdown and emergence of new coronavirus variants reduced the prospect of a swift recovery.

“NYMEX crude trades1.18% lower near $57.55/bbl amid IEA and OPEC’s downbeat global demand outlook, the prospect of improvement Libyan supply and mixed US economic data. However, supporting price is the possibility of a strike in Norway and Saudi’s voluntary production cut. Crude is showing some signs of correction and we may see extended losses on demand concerns”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

West Texas Intermediate crude was down 0.69 percent to $57.84 per barrel, while Brent crude, the London-based international benchmark fell 0.56 percent to $60.80 per barrel.

MCX iCOMDEX Crude Oil Index inched lower 38.64 points, or 0.80 percent, at 4,780.49 at 15:57.

In the futures market, crude oil for February delivery touched an intraday high of Rs 4,231 and an intraday low of Rs 4,183 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 3,486 and a high of Rs 4,293.

Crude oil delivery for February slipped Rs 40, or 0.94 percent, to Rs 4,201 per barrel at 15:58 hours IST with a business turnover of 4,201 lots. 

Crude oil delivery for March edged lower Rs 41, or 0.96 percent to Rs 4,215 per barrel with a business volume of 344 lots.

The value of February and March’scontracts traded so far is Rs 622.83 crore and Rs 5.22 crore, respectively.

Trading strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices extended loses after IEA and OPEC lowered oil demand outlook for the year indicating slower than expected demand recovery. Crude oil price failed to breach key resistance above $60 per barrel triggering some price correction.

We expect crude oil prices to trade sideways to down with support at $57 and resistance at $58.50. MCX Crude oil February has support at Rs 4,160, resistance at Rs 4,270.

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