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Crude oil prices jump on expectation of bullish inventory report, strong growth prospects; WTI hover around $72 a barrel

The black gold has been trading higher than 5, 50, 100 and 200 days' moving averages but lower than the 20-day moving averages on the daily chart.

Mumbai / July 28, 2021 / 04:59 PM IST
crude oil

crude oil

Crude oil prices were trading firm after API data showed a drawdown in US stockpiles and strong economic growth prospect despite concerns relating to Delta variant of coronavirus cases. The oil prices rise on prospects of bullish EIA weekly inventory data and IMF maintained global growth forecast at 6 percent and raised forecast for advanced economies.

The energy commodity traded in the green after a gap-up start, tracking the upbeat global trend.

On the MCX, crude oil delivery for August gained Rs 34, or 0.64 percent, to Rs 5,368 per barrel at 15:52 hours IST with a business turnover of 5,540 lots. The delivery for September jumped Rs 19, or 0.36 percent to Rs 5,331 per barrel with a business volume of 226 lots.

The value of August and September’s contracts traded so far is Rs 691.19 crore and Rs 7.44 crore, respectively.

West Texas Intermediate (WTI) crude rose 0.33 percent to $71.89 per barrel, while Brent crude, the London-based international benchmark, up 0.27 percent to $73.72 per barrel.

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Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd said, “The markets expect the global economic growth to sustain in the coming months which limited the fall in oil prices. Bets on a decrease in the US Crude inventories and expectation of an increase in global Oil demand might levy some support for Oil prices.”

The American Petroleum Insitute (API) reported that US crude inventories fell by 4.7 million barrels for the week ended July 23. The gasoline inventories dropped by 6.2 million barrels and distillate stocks declined by 1.9 million barrels.

Market players will take further cues from EIA weekly inventory report to be released later in the day.

The International Monetary Fund maintained its 6 percent global growth forecast for 2021, upgrading its outlook for wealthy economies but cutting estimates for developing countries struggling with surging coronavirus infections.

Technicals

The black gold has been trading higher than 5, 50, 100 and 200 days' moving averages but lower than the 20-day moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 51.38, which indicates a sideways movement in the prices.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices traded higher on expectations of bullish weekly inventory data. The API report on Tuesday showed a draw of 4.7 mb in last week. Crude oil prices got support from the peak summer season which may reflect in the weekly inventory drawdown in the official data released by EIA today.

Crude oil prices are expected to trade sideways to up for the day with resistance at $73 and support at $70 per barrel. MCX Crude oil August has support at Rs 5,280, resistance at Rs 5,450.

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Sandeep Sinha
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