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Crude oil hits fresh 52-week high after OPEC+ fail to agree production plan; Brent inches near $78 a barrel

Patel expects crude oil prices are expected to trade up for the day with resistance at $78 and support at $76 per barrel.

Mumbai / July 06, 2021 / 05:11 PM IST
crude oil

crude oil

Crude oil prices touched a fresh 52-week high during intraday on the MCX after talks between OPEC and its oil-producing allies were postponed indefinitely, with the group failing to reach an agreement on production policy for August and beyond. The oil price jumped on fears of the tighter market due to higher demand following the recovery in global demand amid stalled OPEC decision.

The energy commodity traded in positive territory after a gap-up start tracking the strong overseas cues.

On the MCX, crude oil delivery for July soared Rs 14, or 0.25 percent, to Rs 5,701 per barrel at 16:28 hours IST with a business turnover of 10,891 lots. The delivery for August edged higher Rs 17, or 0.30 percent to Rs 5,661 per barrel with a business volume of 627 lots.

The value of July and August’s contracts traded so far is Rs 669.18 crore and Rs 14.05 crore, respectively.

West Texas Intermediate (WTI) crude climbed 1.73 percent to $76.46 per barrel, while Brent crude, the London-based international benchmark, rose 0.30 percent to $77.38 per barrel.

Close

The United Arab Emirates said it was not alone in seeking a higher baseline as others, including Azerbaijan, Kazakhstan, Kuwait and Nigeria, had requested and received new ones since the deal was first agreed last year.

The economic rebound from COVID-19 is boosting gasoline consumption and draining inventory building in important economies including China and the United States.

Markets await Saudi Aramco official selling price (OSP) announcement that will throw some light on the final outcome of the OPEC+ meet.

Tapan Patel- Senior Analyst (Commodities), HDFC securities said, “Crude oil prices rose after OPEC plus nations failed to reach an agreement on a change in output quota. The OPEC+ talks collapsed on Monday as the United Arab Emirates (UAE) seeks to increase supply against Saudi Arabia's proposal to keep a tight lid on production. Crude oil prices rose on tighter market fears on higher demand with stalled OPEC decision.”

“The Oil exporting group called off the meeting without any deal on the production stance in the months ahead after UAE objected to the easing production cuts and extending the output cuts. Oil prices gained on bets on no additional Oil supply by OPEC and its allies after the earlier reports suggested unwinding of the production curbs infused in 2020 following the recovery in global demand”, said Prathamesh Mallya, AVP Research Non-Agri Commodities and Currencies, Angel Broking Ltd.

However, he added that worries over tighter pandemic led curbs in Asia, Australia and Europe following the increase in the Delta variant cases capped the gains for Crude.

Technicals

The black gold has been trading higher than 5, 20, 50, 100 and 200 days' simple moving averages and exponential moving averages on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 73.60, indicating bullish movement in the prices.

Trading Strategy

Patel expects crude oil prices are expected to trade up for the day with resistance at $78 and support at $76 per barrel. MCX Crude oil July has support at Rs 5,650, resistance at Rs 5,790.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX Crude oil future trading on a positive note after a session where prices rallied more than 70 points. The market is trading sideways range of Rs 5,688-5,728 since morning. We may expect a rise in prices in the evening session where Rs 5,750 levels may be tested.”

Sriram Iyer, Senior Research Analyst at Reliance Securities said, “MCX Crude Oil July holds resistance near Rs 5,730-5,810 levels whereas support is at Rs 5,630-5,580 levels.”

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Sandeep Sinha

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