Crude oil prices moderately fell on July 16 as participants trimmed their positions as seen by the open interest. The prices had been on track for the biggest decline since mid-March amid concerns of Delta variant cases and the prospects for an OPEC+ deal to boost supply.
The energy commodity recovered earlier losses to trade in the negative after a gap-down start despite the positive global cues.
On the MCX, crude oil delivery for July eased Rs 27, or 0.50 percent, to Rs 5,354 per barrel at 16:15 hours IST with a business turnover of 1,872 lots. The delivery for August slipped by Rs 24, or 0.45 percent to Rs 5,351 per barrel with a business volume of 3,391 lots.
The value of July and August’s contracts traded so far is Rs 424.91 crore and Rs 324.99 crore, respectively.
West Texas Intermediate (WTI) crude rose 0.39 percent to $71.93 per barrel, while Brent crude, the London-based international benchmark, gained 0.30 percent to $73.69 per barrel.
“NYMEX crude trades has recovered from earlier losses to trade near $72/bbl. On the OPEC front, Saudi Arabia and the United Arab Emirates appeared to be closing in on an agreement on August production. But the deal still needs to be ratified by the enlarged 23-nation OPEC+ alliance. Separately, OPEC published its first detailed assessment of 2022, in which it forecast that global oil demand will steadily recover to surpass pre-pandemic levels in the second half of next year. Back to back decline in oil price has made a case for the biggest weekly decline since mid-March amid concerns on Delta variant spread and a prospect for an OPEC+ deal to boost supply,” said Ravindra Rao, CMT, EPAT-Quantinsti, Head - Commodity Research at Kotak Securities Ltd.
The Organization of the Petroleum Exporting Countries (OPEC) in its monthly report said that world oil demand is expected to surpass 100 million barrels per day in the second half of 2022, led by demand growth in China and India.
Technicals
The black gold has been trading higher than 50, 100 and 200 days' moving averages but lower than the 5 and 20 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 49.41, which indicates sideways movement in the prices.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil is heading for the biggest weekly decline since mid-March. The United Arab Emirates is nearing a deal that would give it better terms and allow OPEC+ to boost output in the coming months. Crude oil prices traded under pressure as a resurgence of Covid-19 in some parts of the world has raised demand growth concerns.
Crude oil prices are expected to trade sideways to down for the day with resistance at $73 and support at $70 per barrel. MCX Crude oil July has support at Rs 5,280, resistance at Rs 5,420.
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