Crude oil futures decline 0.83% to Rs 3,098 per barrel on profit booking

Crude oil futures edged lower to Rs 3,098 per barrel on November 12 as participants increased their short position as seen by the open interest. Crude oil price weakened tracking weakness in the global equity market and concerns on rising COVID cases across the US and Europe.

Markets players’ book profit after oil prices jumped nearly 28 percent from the lows of last week and the momentum seems to be weakening above $42/bbl levels.

The American Petroleum Institute (API) reported that US crude inventories fell by 5.51 million barrels for the week ended November 6. The focus will now shift to EIA weekly report due later today.

Ravindra Rao, VP-Head commodity Research, Kotak Securities said, “NYMEX crude trades marginally higher near $41.36/bbl as traders await the EIA inventory report scheduled to be released today. Price remains supported by expectations that OPEC may take fresh measures to rebalance the market, signs of progress on the vaccine front and expectations of a sharp drop in US crude stocks. While the momentum is still positive some profit taking is likely near US EIA's weekly inventory report and IEA's monthly outlook today.

West Texas Intermediate crude was up 0.14 percent quoting at $41.51 per barrel, while Brent crude, the London-based international benchmark gained 0.05 percent to $43.82 per barrel.

MCX iCOMDEX Crude Oil Index dropped 30.13 points, or 0.83 percent, at 3,589.87 at 15:24.

Also read: Dated Brent will recover towards $50/barrel only by end-2021: S&P Global Platts

In the futures market, crude oil for November delivery touched an intraday high of Rs 3,118 and an intraday low of Rs 3,064 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 2,540 and a high of Rs 3,204.

Crude oil delivery for November eased Rs 26, or 0.83 percent, to Rs 3,098 per barrel at 15:25 hours IST with a business turnover of 3,465 lots.

Crude oil delivery for December fell Rs 26, or 0.82 percent, to Rs 3,129 per barrel with a business volume of 131 lots.

The value of November and December’s contracts traded so far is Rs 1,417.81 crore and Rs 4.86 crore, respectively.

Trading strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices traded firm with NYMEX WTI Crude oil prices held above $41 per barrel on Thursday. MCX Crude oil November futures were trading down to Rs 3,095 by noon session reflecting overnight correction in global oil prices.

Crude oil prices kept an upper trading range on expectations that OPEC plus nations may keep output quota unchanged or further deepened instead of easing it. The comments from Algerian Energy minister supported oil prices to trade firms on Thursday. We expect crude oil prices to trade sideways to up for the day ahead of official inventory data.

We expect crude oil prices to trade up with support at $40 and resistance at $43.50. MCX Crude oil November has support at Rs 3,040, resistance at Rs 3,180.

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