Crude oil futures touch January series high of Rs 3,755, Brent trades near $55 a barrel

Crude oil futures climbed to Rs 3,741 per barrel on January 7 as participants increased their long position as seen by the open interest. Crude oil price rose after Saudi Arabia pledged additional production cut and a sharp decline in US crude stockpiles.

The US Energy Information Administration (EIA) reported that US crude inventories fell by 8.01 million barrels for the week ended January 1.

Crude oil prices traded near multi-month high amid signs of tightening supply and continuing stimulus measures in the US.

OPEC+ agreed that most producers would hold output steady in February and March while allowing Russia and Kazakhstan to increase output by modest 75,000 bpd in February and a further 75,000 in March.

“NYMEX crude trades higher above $50/bbl supported by a bigger-than-expected decline in US crude oil stocks, Saudi’s voluntary production cuts, tensions relating to Iran and hopes of additional stimulus measures in the US. However, weighing on price is rising coronavirus cases globally and disappointing US labour data. Crude may continue to trade higher on expectations of tightening supply," said Ravindra Rao, VP-Head Commodity Research at Kotak Securities.

West Texas Intermediate (WTI) crude was up 0.63 percent quoting at $50.95 per barrel, while Brent crude, the London-based international benchmark gained 0.28 percent to $54.45 per barrel.

MCX iCOMDEX Crude Oil Index inched higher 22.80 points, or 0.54 percent, at 4,265.86 at 15:44.

In the futures market, crude oil for January delivery touched an intraday high of Rs 3,755 and an intraday low of Rs 3,722 per barrel on the MCX. So far in the current series, black gold has touched a low of Rs 3,130 and a high of Rs 3,755.

Crude oil delivery for January soared Rs 20, or 0.54 percent, to Rs 3,741 per barrel at 15:46 hours IST with a business turnover of 2,658 lots. 

Crude oil delivery for February gained Rs 31, or 0.83 percent, to Rs 3,755 per barrel with a business volume of 14 lots.

The value of January and February’s contracts traded so far is Rs 285.29 crore and Rs 0.22 crore, respectively.

Trading strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices traded higher with benchmark NYMEX WTI crude oil rising above $51 per barrel on Thursday, gaining for a third consecutive day. MCX Crude oil January futures were trading up at Rs 3,745 by noon session.

Crude oil prices gained with a rally in equities, bullish inventory data and expectations of tighter supply. Saudi Arabia surprised the market with its pledge to cut 1 mb per day of output in February and March.

We expect crude oil prices to trade sideways to up with support at $49 and resistance at $52. MCX Crude oil January has support at Rs 3,670, resistance at Rs 3,780.

Anuj Gupta- DVP- Commodities and Currencies Research, Angel Broking Ltd

Depleting inventories and hopes over improvement in demand considering the additional stimulus by the US might support Oil prices. On the MCX, oil prices are expected to trade lower today. As for today can go for buy in MCX crude oil at Rs 3,700 levels with the stop loss of Rs 3,630 levels and for the target of Rs 3,800 levels. We expect WTI crude oil may test $55 to $58 levels very soon.

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