Crude oil futures gained 1.02 percent to Rs 3,761 per barrel on January 31 as participants increased their long position as seen by the rise in open interest.
Oil prices recovered after the World Health Organisation (WHO) came out against travel and trade restrictions in declaring global emergency over the spread of coronavirus that originated in China last year.
Crude oil futures have lost 14 percent in January after hitting a high of Rs 4,663/bbl on January 4. The spike was caused after the US killed Iran Quds Force chief Qassem Soleimani on January 3. The black gold has been on a downward path following the coronavirus outbreak in China on fears of a slowdown in economic growth.
According to Abhishek Bansal, Chairman and MD, Abans Group of Companies, Crude oil prices firmed up after the World Health Organisation (WHO) declared Coronavirus a global emergency. Crude oil demand has also been hit with multiple cities in China facing a complete lockdown due to the virus.
However, an EIA Weekly Report that expects a larger-than-expected US inventory build-up hints at crude prices staying under pressure. According to the EIA report, crude stocks rose by 3.5 million barrels to 431.7 million barrels against market expectations of a 482,000-barrel rise in the week ending January 24.
Crude may find some support as seeing the current supply situation and demand outlook, OPEC could extend oil output cuts. OPEC and Russia have been trying to stabilize prices through production.
In the futures market, crude oil touched an intraday high of Rs 3,817 and an intraday low of Rs 3,739 per barrel on the MCX. In the February series, it touched a low of Rs 3,712 and a high of Rs 4,663/bbl.
On the Multi Commodity Exchange, crude oil delivery for March contracts rose Rs 38, or 1.01 percent, to Rs 3,784 per barrel.
The value of the February and March contracts traded so far is Rs 3,439.24 crore and Rs 105.91 crore, respectively.
Crude prices on the MCX is expected to trade positively with strong support at Rs 3,740 levels and intermediate support at Rs 3,775 level, Motilal Oswal said in a recent report. The broking firm advised its client to buy crude, targeting higher resistance at Rs 3,850 and then Rs 3,890.
West Texas Intermediate crude rose 0.73 percent to $52.52 per barrel, while Brent crude, the international benchmark was up 0.44 percent to $57.58 per barrel.