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Last Updated : Oct 16, 2020 05:13 PM IST | Source: Moneycontrol.com

Crude oil futures slip 0.87% to Rs 2,968 per barrel on weak demand

In the futures market, crude oil for October delivery touched an intraday high of Rs 2,994 and a low of Rs 2,952 per barrel on the MCX


Crude oil futures edged lower to Rs 2,968 per barrel on October 16 as participants increased their short positions on fading US stimulus hopes, OPEC's production policy and rising coronavirus cases in the US and Europe.

Mohammad Barkindo, Secretary General, Organisation of the Petroleum Exporting Countries, said demand was recovering more slowly than expected and OPEC+ will ensure oil prices do not plunge steeply again when it meets at the end of November.

The US Energy Information Administration (EIA) reported that US crude inventories fell by 3.81 million barrels for the week-ended October 9.

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The number of American filing new claims for jobless benefits rose last week to a two-month high by 53,000 to a seasonally adjusted 898,000 for the week ended October 10.

West Texas Intermediate crude was down 1.12 percent at $40.50 per barrel, while Brent crude, the London-based international benchmark, eased 1.25 percent to $42.62 per barrel.

MCX iCOMDEX Crude Oil Index dropped 31.29 points, or 0.89 percent, to 3,470.52 at 15:51 hours.

“Crude may witness choppy trade amid mixed factors, but the general bias may be on the downside owing to demand concerns,” said Ravindra Rao, VP-Head Commodity Research, at Kotak Securities.

In the futures market, crude oil for October delivery touched an intraday high of Rs 2,994 and a low of Rs 2,952 per barrel on the Multi-Commodity Exchange (MCX). So far in the current series, black gold has touched a low of Rs 2,718 and a high of Rs 3,320.

Crude oil futures for October delivery slipped Rs 26, or 0.87 percent, to Rs 2,968 per barrel at 15:53 hours IST on a business turnover of 4,307 lots. The same for November delivery fell Rs 26, or 0.86 percent, to Rs 2,996 per barrel on a business volume of 290 lots.

The value of October and November’s contracts traded so far is Rs 886.93 crore and Rs 8.85 crore, respectively.

Trading strategy

Tapan Patel, Senior Analyst (Commodities), HDFC Securities:

Crude oil prices traded under pressure after gaining on bullish weekly inventory data in previous trading session. Prices are expected to trade with a bearish bias over weak demand and oversupply scenario as OPEC+ signalled it will ease its output cuts quota by 2 million barrels per day from January 2021.

Patel expects crude oil prices to trade sideways to up with support at $39 and resistance at $42. MCX Crude oil October has support at Rs 2,920 and resistance at Rs 3,040.

Sriram Iyer, Senior Research Analyst at Reliance Securities:

International oil prices were trading weaker in Asian trade on Friday afternoon amid concerns that a spike in COVID-19 cases in Europe and the United States is curtailing demand for the fuel. The dollar was trading lower in afternoon trade and capped downside.

Technically, NYMEX WTI Crude has bounced back from 50-Daily Moving Average where it is sustaining above$40.00 levels indicating sideways to upside movement in coming sessions. Resistance and support is seen at $41.55-$42.80 and $40.30-$39.51 levels, respectively.

Domestic oil prices are trading marginally weaker, tracking weak overseas prices. MCX Crude Oil October faces strong resistance near Rs 3,003. A breach of this could see crude touching Rs 3,030-3,070 levels. Downside support is seen at Rs 2,940-2,910 levels.

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First Published on Oct 16, 2020 05:13 pm
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