Crude oil prices slumped after a recent rally fizzled out in anticipation of rising supplies after a compromise reached between Saudi Arabia and the UAE in OPEC+ standoff. The prices dropped as gasoline demand in the US declined considerably last week.
The energy commodity extended decline to trade at day’s low after a negative start tracking the subdued global trend.
On the MCX, crude oil delivery for July tumbled Rs 81, or 1.49 percent, to Rs 5,370 per barrel at 18:14 hours IST with a business turnover of 3,623 lots. The delivery for August fell by Rs 76, or 1.40 percent to Rs 5,354 per barrel with a business volume of 3,215 lots.
The value of July and August’s contracts traded so far is Rs 1,310.20 crore and Rs 461 crore, respectively.
West Texas Intermediate (WTI) crude corrects 1.65 percent to $71.93 per barrel, while Brent crude, the London-based international benchmark, declined 1.52 percent to $73.62 per barrel.
“NYMEX crude trades lower near $72 per barrel. Crude fell amid lower than expected decline in crude and gasoline stocks as shown by the API print. EIA report yesterday showed that the US gasoline stockpiles unexpectedly expanded. US gasoline stockpiles increased by more than 1 million barrels last week, according to the EIA. Crude oil has fallen back from the recent highs gaining support from mixed inventory reports and OPEC uncertainty and demand concerns that may continue to weigh on prices,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
The US Energy Information Administration (EIA) reported that US crude decreased by 7.9 million barrels for the week ended July 9 against market expectation of 4.4 million barrels draw.
However, concerns remained as China’s crude import reduced by 3 percent during January to June 2021 period.
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 49.48, which indicates neutral movement in the prices.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices are expected to trade down for the day with resistance at $74 and support at $70 per barrel. MCX Crude oil July has support at Rs 5,270, and resistance at Rs 5,410.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
The market is trading with bearish momentum and has shed over 70 points since the previous close. We may expect the prices to continue the downward movement in the evening session where Rs 5,300 levels may be tested.
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