Crude oil futures gained 1.23 percent to Rs 3,855 per barrel on January 29 as participants increased their long position as seen by the open interest. The gain in oil prices was supported by the OPEC might continue crude output cut till June and fall in US crude inventory by 4.3 million barrels reported by the American Petroleum Institute.
According to Abhishek Bansal, Chairman and MD, Abans Group of Companies, A surprise drop in crude oil inventory in a survey report from the API have supported the falling crude oil prices, but still, supply-side is likely to remain higher from robust US production and weak demand after the breakout of coronavirus in China.
Crude oil demand in China is affected due to the rise in several affected cases, and an increase in the lockdowns of cities. China's National Health Commission has said that the total number of deaths from the virus rose to 132 till Tuesday, while the number of confirmed cases rose to 5,974.
Travel advisories in US, UK and China and other restrictions will affect the consumption of fuel and have a significant impact on the growth of the larger economies. Eyes are on the weekly crude oil inventory data from EIA later today, said Bansal.
In the futures market, crude oil touched an intraday high of Rs 3,889 and an intraday low of Rs 3,822 per barrel on MCX. For the February series, the crude touched a low of Rs 3,735 and a high of Rs 4,663.
On the Multi Commodity Exchange (MCX), crude oil delivery for March contracts gained Rs 46, or 1.21 percent, to Rs 3,854 per barrel with a business turnover of 8,134 lots.
Crude for delivery in February contracts was up Rs 50, or 1.31 to Rs 3,858 per barrel with a business volume of 29,972 lots.
The value of the February contract traded so far is Rs 3,298.30 crore and March contract saw value of Rs 76.59 crore.
Crude oil prices gave a gap down opening in last trading session and it traded volatile throughout the day. Prices respected the strong support zone of Rs 3,750 levels and managed to close near Rs 3,780 levels.
Overall, the trend is looking negative to sideways for prices. Traders can buy Crude oil only if it sustains above Rs 3,800 levels on an hourly basis or else prices may drift lower towards 3750 levels, according to Axis Securities.West Texas Intermediate crude gained 0.92 percent to $53.97 per barrel while Brent crude, the international benchmark was up 0.90 percent to $59.32 per barrel.