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Oil prices fall for second straight day on coronavirus concerns, profit booking; Brent slips below $74 a barrel

The momentum indicator Relative Strength Index is at 64.43, indicating bullish movement in prices.

Mumbai / June 29, 2021 / 04:49 PM IST

Crude oil futures on June 29 traded lower as participants booked profit ahead of the OPEC+ meeting and renewed coronavirus concerns as rising delta variant cases across the globe may dampen fuel demand recovery. The energy commodity has declined over 2 percent after hitting a fresh 52-week high in yesterday’s session.

On the MCX, crude oil delivery for July dropped Rs 30, or 0.55 percent, to Rs 5,384 per barrel at 16:13 hours IST with a business turnover of 6,367 lots. The delivery for August declined Rs 24, or 0.45 percent to Rs 5,361 per barrel with a business volume of 515 lots.

The value of July and August’s contracts traded so far is Rs 947.50 crore and Rs 14.39 crore, respectively.

West Texas Intermediate (WTI) crude slipped 0.64 percent to $72.44 per barrel, while Brent crude, the London-based international benchmark, fell 0.40 percent to $73.84 per barrel.

“NYMEX crude trades marginally lower near $72.5/bbl. Crude has retreated from Oct 2018 highs amid profit taking ahead of OPEC+ meeting this week where the group will discuss production hike. Renewed virus concerns, slower activity in China and Fed’s monetary tightening concerns also weighing on price. However, supporting the price is lower US crude stocks, US optimism and uncertainty about Iran’s nuclear deal. Crude may remain sideways ahead of OPEC decision; however, the general bias is still on the upside as OPEC is unlikely to surprise with a major production hike,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

Close

Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd said, “Markets will remain cautious ahead of the Organisation of Petroleum Exporting Countries and allies meet scheduled on July 1, 2021, i.e. Thursday. The group is returning 2.1 million barrels per day in the global markets from May 2021 to July 2021. Markets expect that the group might continue to ease production curbs imposed in 2020 following bets on boost in fuel demand in the months ahead.”

He added that the number of COVID cases in Asia, Australia and Europe paused the rally in oil prices on the first trading day of the week.

Technicals

The black gold has been trading higher than 20, 50, 100 and 200 days' moving averages but lower than the 5-day moving averages on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 64.43, indicating bullish movement in prices.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices traded under pressure on demand growth concerns as rising delta variant cases across the globe may dampen fuel demand recovery. The UK reported the highest daily rise in COVID-19 cases on Monday since January 30. Hong Kong, Spain and Portugal banned all passenger flights from the nation to curb the spread of outbreaks involving COVID-19's Delta variant. The speculation ahead of OPEC plus meeting this week and US summer driving season demand may keep oil prices on edge for the short term.

Crude oil prices are expected to trade sideways to up for the day with resistance at $74 and support at $72 per barrel. MCX Crude Oil July has support at Rs 5,350 and resistance at Rs 5,490.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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