Crude oil futures down 1.02% to Rs 3,120/bbl on weak demand

Crude oil futures edged lower to Rs 3,120 per barrel on August 7 as participants increased their short positions. Prices have turned choppy after touching $46 per barrel amid mixed cues.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities, said slower economic recovery and expectation of higher supply from OPEC+ nations has kept the upside limited in oil prices. "Trade tensions between US and China and uncertainty over the coronavirus package has also pressured oil prices to trade down despite stronger equity indices."

“Persistent weakness in the dollar and upbeat manufacturing data from major economies is supporting the bull case. However, expectation of higher supply from OPEC is capping the gains. Crude oil may witness choppy trade amid mixed factors, with selling pressure expected to re-emerge at higher levels on demand worries and higher supply from US and OPEC,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

In the futures market, crude oil for August delivery touched an intraday high of Rs 3,155 and a low of Rs 3,111 per barrel on the Multi-Commodity Exchange (MCX). So far in the current series, black gold touched a low of Rs 2,520 and a high of Rs 3,263.

Crude oil futures for August delivery slipped Rs 32, or 1.02 percent, to Rs 3,120 per barrel at 15:29 hours IST on a business turnover of 3,929 lots. The same for September delivery edged lower by Rs 30, or 0.94 percent, to Rs 3,156 per barrel on a business volume of 135 lots.

The value of August and September's contracts traded so far is Rs 927.17 crore and Rs 2.56 crore, respectively.

Patel expects oil prices to trade sideways to down for the day with support at $40 and resistance at $43. "MCX August Crude Oil futures has support at Rs 3,080 and resistance at Rs 3,180."

West Texas Intermediate crude slipped 1 percent to $41.53 per barrel, while Brent crude, the London-based international benchmark, was down 0.89 percent to $44.69 per barrel.

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