Crude oil price steady at Rs 4,468/barrel after over 7% drop last week, Brent trades above $64/bbl

Crude oil futures were firm at Rs 4,468 per barrel on March 22, after a one-way up move that started in October broke last week with prices falling 7.54 percent on the MCX. Prices crashed as a fresh wave of coronavirus infections across Europe dashed hopes of demand recovery in fuel.

The energy commodity traded in the positive territory after a flat to gap-down start in the afternoon session.

Crude has been trading higher than 50, 100 and 200 days' moving averages but lower than the 20 and 5 days’ moving average on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 48.65 indicating neutral momentum in prices.

The number of rigs drilling crude oil in the US rose by 9 to 318 rigs for the week to March 19, said Baker Hughes in a weekly report. 

The CFTC data showed money managers increased net long positions by 2,331 lots in the last week.

West Texas Intermediate crude was down 0.15 percent to $61.35 per barrel, while Brent crude, the London-based international benchmark fell 0.20 percent to $64.41 per barrel.

“Crude oil prices witnessed sell-off during last week on the demand growth concerns. Crude oil demand is yet to recover fully due to curtailed travel and transportation. Crude oil prices declined form key resistance levels of $68 as investors booked profits after European countries halted vaccination. The US inflation concerns and higher bond yields raised concerns over demand recovery,” said Tapan Patel- Senior Analyst (Commodities), HDFC Securities.

MCX iCOMDEX Crude Oil Index was marginally higher 5.62 points, or 0.11 percent, at 5,016.93 at 16:34.

In the futures market, crude oil for April delivery touched an intraday high of Rs 4,502 and an intraday low of Rs 4,396 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 9, or 0.20 percent, to Rs 4,468 per barrel at 16:35 hours IST with a business turnover of 4,657 lots. 

Crude oil delivery for May decreased Rs 13, or 0.29 percent to Rs 4,485 per barrel with a business volume of 80 lots.

The value of April and May’s contracts traded so far is Rs 1,461.75 crore and Rs 10.54 crore, respectively.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices traded under pressure on demand growth concerns over lockdown fears in Europe. The rising COVID-19 cases in Europe and stalled vaccination has dimmed the oil demand outlook. The stronger dollar and higher bond yields also pressured oil prices to trade weak.

Crude oil prices are expected to trade sideways to down for the day with resistance at $62.50 and support at $59 per barrel. MCX Crude oil April has support at Rs 4,360, resistance at Rs 4,510.

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

The WTI Crude Oil market has broken down severely last week, falling below $60, only to recover and save itself on Friday, but the inside move on the daily chart suggests buyers aren’t showing much conviction.

For the week, Purohit said traders should make a sell position in the MCX Crude oil future. The ideal range to enter in any buy position should be around Rs 4,420-4,470 for the target beyond Rs 4,120-4,150 and keeping a stop loss at Rs 4,470.

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