Crude oil futures rose to Rs 1,887 per barrel on May 12 as participants increased their long positions. Prices rose after Saudi Arabia announced on May 11 that it will reduce June oil output by 1 million barrels per day.
Fellow OPEC countries, UAE and Kuwait, to said that they will cut output by 100,000 and 80,000 barrels per day, respectively.
Crude oil is likely to take further cues from the API data scheduled to be release later in the day.
Easing of lockdowns may bring back demand and commitment from Saudi Arabia in June on deepening the production cuts have helped WTI and Brent prices to hold levels of $25 and $30, respectively, Sunilkumar Katke, Head - Commodities & Currency, Axis Securities, said.
In the futures market, crude oil for May delivery touched an intraday high of Rs 1,893 and an intraday low of Rs 1,848 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 796 and a high of Rs 3,905.
Crude oil futures for May delivery gained Rs 41, or 2.22 percent, to Rs 1,886 per barrel at 15:03 hours IST on a business turnover of 7,213 lots. The same for June delivery rose Rs 24, or 1.23 percent, to Rs 1,983 per barrel on a business volume of 1,390 lots.
The value of May and June contracts traded so far is Rs 622 crore and Rs 15.35 crore, respectively.
Domestically, on the Multi Commodity Exchange (MCX), prices are holding above Rs 1,875 per barrel. "We still believe the pullback in prices may not sustain considering the lack of overall demand and high inventory levels, backed by storage concerns in the US for contracts settling in May," Katke said.
He advises traders to take a cautious sell position in crude oil at Rs 1,900 levels with a stop loss at Rs 1,960 for targets of close to Rs 1,800 during the day.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities, too feels worries over the second wave of coronavirus infections in China and South Korea may limit the upside in prices. He sees support for May Crude Oil futures at Rs 1,700 with resistance at Rs 1,950.
West Texas Intermediate crude gained 3.07 percent at $24.88 per barrel, while Brent crude, the London-based international benchmark was up 1.32 percent to $30.02 per barrel.
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