Crude oil futures surge 1.65% to Rs 4,507/barrel; Brent trades near $64

Crude oil futures climbed to Rs 4,507 per barrel on April 12 as participants increased their long positions as seen by the open interest. Crude oil surged on hopes of recovery in fuel demand as the pace of COVID vaccination accelerated. Further, weakness in the dollar also supported the commodity; however, the surging coronavirus cases globally capped the upside.

Crude oil ended last week with a loss of Rs 80 or 1.77 percent on the domestic bourse.

The energy commodity traded firm after a gap-up start in the afternoon session, tracking the positive global trend.

The black gold has been trading higher than 5, 20, 50, 100 and 200 days' moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 53.03, indicating positive momentum in prices.

Crude oil speculators cut their net long US crude futures and options positions by 18,604 contracts to 375,436 in the week to April 6, the US CFTC data showed.

The number of rigs drilling crude oil in the US remained unchanged at 337 rigs for the week to April 9, the highest since April 2020, said Baker Hughes in a weekly report. 

Market participants are also nervous about the ongoing talks between Iran and world powers to revive a 2015 nuclear deal, which would set the stage for the Persian Gulf to increase supply.

Renewed lockdowns in some parts of the world and problems with vaccination could threaten the oil demand picture.

“NYMEX crude trades marginally higher near $59.4 per barrel. Crude oil remains range-bound as support from optimism about the US and global economy, a decline in US crude oil stocks and general strength in the US equity market is countered by rising virus cases, the prospect of higher supply from OPEC and a jump in US crude oil rig count to April 2020 highs. Crude may remain choppy amid mixed factors; however, general bias may be on the downside owing to rising virus cases and the prospect of higher supply”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Also read: MCX Crude oil falls 1.77% to Rs 4,432/barrel this week; expert suggests buy for a target of Rs 4,500

West Texas Intermediate (WTI) crude was up 1.13 percent to $59.99 per barrel, while Brent crude, the London-based international benchmark rose 1.25 percent to $63.74 per barrel.

MCX iCOMDEX Crude Oil Index increased 71.66 points, or 1.44 percent, at 5,054.88 at 16:18 hours.

In the futures market, crude oil for April delivery touched an intraday high of Rs 4,521 and an intraday low of Rs 4,403 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 4,102 and a high of Rs 4,985.

Crude oil delivery for April gained Rs 73, or 1.65 percent, to Rs 4,507 per barrel at 16:19 hours IST with a business turnover of 9,761 lots. 

Crude oil delivery for May edged higher by Rs 67, or 1.51 percent to Rs 4,518 per barrel with a business volume of 852 lots.

The value of April and May’s contracts traded so far is Rs 1,916.96 crore and Rs 84.15 crore, respectively.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices got some support from the dollar decline while lower demand concerns on rising COVID cases across the world. The US Fed chairman Powell said that the economy is at an “inflection point” with stronger growth and hiring ahead thanks to the COVID-19 vaccine rollout and powerful policy support. The Fed comments have lent some support to the oil prices.

Crude oil prices are expected to trade sideways to higher for the day with resistance at $61 and support at $58 per barrel. MCX Crude oil April has support at Rs 4,380 and resistance at Rs 4,510.

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