Crude oil futures climbed to Rs 3,438 per barrel on December 4 as participants increased their long position as seen by the open interest. Crude oil price rose after OPEC+ nations agreed to ease output quota by 0.5 million barrels per day to 7.2 mb per day from January 2021.
OPEC+ will now meet once a month to review conditions and monthly increases will not be greater than 500,000 barrels per day.
The group had been widely expected to roll over those production cuts of 7.7 million barrels per day into January-March 2021 amid a resurgent COVID-19 pandemic. Saudi Arabia was the main advocate of such a move. Major economies like the US and Europe are facing a tough time containing COVID-19 increasing chances of fresh lockdown and the demand dent for crude.
Crude prices had seen some support from the better than expected US weekly jobless claims and services PMI data here.
Tapan Patel- Senior Analyst (Commodities), HDFC securities said, “Crude oil prices pared previous losses after OPEC plus nations agreed to ease output quota by 0.5 mb per day to 7.2 mb per day from January 2021 which is less than prior expectations of 2 mb per day. Crude oil prices are expected to trade sideways to up for the day on positive global cues and a weaker dollar,” he said.
We expect crude oil prices to trade sideways to up with support at $45 and resistance at $48. MCX Crude oil December has support at Rs.3390, resistance at Rs.3490.
"NYMEX crude trades higher near $46.50/bbl amid OPEC’s gradual approach to production hikes. OPEC and allies on Thursday decided to reduce production cut by 0.5 million barrel per day to 7.2 million bpd in January 2021 and then meet monthly to decide upon the future course with further hike limited to 0.5 million bpd.
"Crude is also supported by general optimism about vaccine and decline in US crude stocks. Crude has rescaled March highs however OPEC decision paves way for more supply whereas demand remains limited by a virus spread so a sustained rise is unlikely", said Ravindra Rao, VP-Head Commodity Research, Kotak Securities Ltd.
West Texas Intermediate crude was up 1.82 percent quoting at $46.47 per barrel, while Brent crude, the London-based international benchmark soared 1.81 percent to $49.59 per barrel.
MCX iCOMDEX Crude Oil Index inched higher 57.42 points, or 1.48 percent, at 3,944.31 at 15:29.
In the futures market, crude oil for December delivery touched an intraday high of Rs 3,449 and an intraday low of Rs 3,410 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 2,594 and a high of Rs 3,449.
Crude oil delivery for December gained Rs 53, or 1.57 percent, to Rs 3,438 per barrel at 15:30 hours IST with a business turnover of 1,909 lots.
Crude oil delivery for January rose Rs 51, or 1.49 percent, to Rs 3,464 per barrel with a business volume of 45 lots.
The value of December and January’s contracts traded so far is Rs 329.32 crore and Rs 1.07 crore, respectively.
Trading strategy
Anuj Gupta- DVP- Commodities and Currencies Research, Angel Broking Ltd
As for today, traders can go for BUY in Crude Oil at Rs 3,330 levels with the stop loss of Rs 3,270 levels for the target of Rs 3,450 levels. WTI Crude Oil may test $48 per barrel levels and Brent Crude Oil may test $52 per barrel very soon.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
MCX Crude December has confirmed Bullish Reversal and opened gap up. Price above Rs 3,400 will continue upside momentum up to Rs 3,480 levels. As per the weekly chart, the commodity may see profit booking from 100 Week SMA placed at Rs 3,480 levels. On the downside, strong support is at Rs 3,380-3,340 levels.
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