Crude oil futures edged higher to Rs 3,839 per barrel on January 18 as participants increased their long positions as seen by the open interest. The crude oil price had gained 0.74 percent last week on the MCX.
Crude oil prices traded firm in the afternoon trade after a gap-down open, thus reversing earlier losses.
Money managers raised their net long US crude futures and options positions by 21,841 contracts to 349,965 in the week to January 12, US CFTC data showed.
The number of rigs drilling crude oil in the US increased by 12 to 287 rigs for the week to January 15, highest since May 2020, said Baker Hughes in a weekly report. The rigs count rose for the eighth straight week.
Meanwhile, Libya’s crude oil output dropped by 200,000 barrels a day after the closure of a leaking pipeline, underscoring how difficult it is for the country to maintain its production following a decade of civil war.
“NYMEX crude trades mildly higher near $52.5/bbl recovering from early losses. Weighing on crude price is recent gains in US dollar index, mixed US economic data, rising virus cases, jump in US crude oil rig count to May 2020 highs. However, supporting price is Saudi’s production cuts, supply concerns relating to Nigeria and progress on the vaccine front. Crude has shown first signs of correction after weeks of rally and while we may see some extended losses the general outlook is still positive”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
West Texas Intermediate crude was flat at $52.42 per barrel, while Brent crude, the London-based international benchmark fell marginally by 0.15 percent to $55.02 per barrel.
MCX iCOMDEX Crude Oil Index inched higher 14.77 points, or 0.34 percent, at 4,381.64 at 15:57.
In the futures market, crude oil for January delivery touched an intraday high of Rs 3,847 and an intraday low of Rs 3,801 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 3,130 and a high of Rs 3,976.
Crude oil delivery for January climbed Rs 14, or 0.37 percent, to Rs 3,839 per barrel at 15:58 hours IST with a business turnover of 2,012 lots.
Crude oil delivery for February jumped Rs 13, or 0.34 percent, to Rs 3,856 per barrel with a business volume of 342 lots.
The value of January and February’s contracts traded so far is Rs 241.26 crore and Rs 15.42 crore, respectively.
Trading strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices traded under pressure as rising COVID-19 cases has raised demand growth concerns despite positive economic data from China and the US. The lower supplies expectations may keep downside limited in oil prices making a range-bound trade in the near term.
We expect crude oil prices to trade sideways to down with support at $51 and resistance at $53. MCX Crude oil January has support at Rs 3,760, resistance at Rs 3,870.
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