Crude oil futures edged lower to Rs 2,918 per barrel on October 7 as participants increased their short positions. Prices traded lower after US President Donald Trump dashed hopes of a stimulus package and larger than anticipated build-up in US crude stocks.
The American Petroleum Institute (API) reported that US crude inventories climbed by 951,000 barrels against analyst expectations of a build of 294,000 barrels for the week-ended October 2.
Energy firms shut offshore oil platforms as Hurricane Delta strengthened to a Category 4 Hurricane, according to US National Hurricane Centre (NHC).
West Texas Intermediate crude was down 2.24 percent at $39.76 per barrel, while Brent crude, the London-based international benchmark, slid 1.78 percent to $41.89 per barrel.
MCX iCOMDEX Crude Oil Index fell 63.17 points, or 1.82 percent, to 3,404.07 at 15:51 hours.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities, said the strike in Norway and possible supply disruption from the Gulf of Mexico due to the hurricane threat may limit the downside in oil prices.
However, Ravindra Rao, VP- Head Commodity Research at Kotak Securities, sees crude remaining under pressure amid weaker risk sentiment and build-up in stocks.
In the futures market, crude oil for October delivery touched an intraday high of Rs 2,965 and a low of Rs 2,910 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 delivery for October slipped Rs 54, or 1.82 percent, to Rs 2,918 per barrel at 15:53 hours IST on a business turnover of 3,509 lots. The same for November delivery was down Rs 46, or 1.53 percent, to Rs 2,959 per barrel on a business volume of 139 lots.
The value of October and November’s contracts traded so far is Rs 831.88 crore and Rs 2.10 crore, respectively.
Trading Strategies
Sriram Iyer, Senior Research Analyst at Reliance Securities: International oil prices are trading weak this Wednesday afternoon trade in Asian after US President Donald Trump dashed hopes for a fourth stimulus package to boost the coronavirus-hit economy. Prices also remained under pressure after American Petroleum Institute data that showed a build in US crude stocks by 951,000 barrels last week compared with expectations for a build of 294,000 barrels.
A slightly bearish report from the US Energy Information Administration and expected supply disruptions from a hurricane approaching the Gulf of Mexico capped weakness. US crude oil production is expected to fall by 800,000 barrels per day (bpd) this year to 11.45 million bpd, a smaller decline than its previous monthly forecast for a drop of 870,000 bpd.
Markets will look ahead to inventory data today from the government for further cues.
Technically, NYMEX WTI Crude Oil halted its upside momentum near 50-Daily Moving Average near $40.50 levels indicating sideways momentum as $39.30 holds strong support. Domestic crude prices are trading weak this Wednesday afternoon, tracking overseas prices.
Technically, MCX Crude Oil October holds a strong resistance at Rs 3,020 levels near 50-Daily Moving Average also it is trading below Rs 2,970 levels indicating some downside pressure. Crude Oil could trade in Rs 2,890-3,020 levels in coming sessions.
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