Crude oil prices declined on demand concern due to rising coronavirus cases, slow growth in China and Saudi Arabia slashing prices for Asia. Crude prices remained unchanged last week on the MCX.
The energy commodity recouped earlier losses to trade in red after a gap-down start, tracking muted overseas cues.
On the MCX, crude oil delivery for September dropped Rs 27, or 0.53 percent, to Rs 5,035 per barrel at 16:20 hours IST with a business turnover of 4,502 lots. The delivery for October decreased Rs 31, or 0.61 percent to Rs 5,035 per barrel with a business volume of 550 lots.
The value of September and October’s contracts traded so far is Rs 557.49 crore and Rs 21.92 crore, respectively.
West Texas Intermediate (WTI) crude fell 0.58 percent to $68.89 per barrel, while Brent crude, the London-based international benchmark, slipped 0.58 percent to $72.19 per barrel.
“NYMEX crude trades modestly lower near $68.8/bbl. Crude trades weaker as Saudi’s move to cut prices for Asia was seen as a sign of weaker demand. Also weighing on price are concerns about the US economy amid disappointing jobs report. Refinery closures in the US have also dented refining demand. However, supporting price is a slow restart of production shut in the Gulf of Mexico due to storm concerns and general weakness in the US dollar. Crude oil has weakened on demand concerns however any sharp losses are unlikely given supply disruptions in the US”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
Prathamesh Mallya, AVP Research Non-Agri Commodities and Currencies, Angel Broking Ltd said, “Oil prices might remain under pressure as the world's top exporter Saudi Arabia slashed crude prices for Asia over the weekend, signalling that global markets are well supplied.”
Also, mounting pandemic worries and slowdown in China amid OPEC’s plan to boost output might continue to weigh on the market sentiments, he noted.
The CFTC data showed that money managers decreased their net long positions by 9 lots in last week.
The number of rigs drilling crude oil in the US declined by 16 to 394 for the week to September 3, said Baker Hughes in a weekly report.
The black gold has been trading higher than 20 and 200 days' moving averages but lower than the 5, 50 and 100 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 48.15, which indicates sideways movement in the prices.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices traded lower on weak demand outlook and Saudi price cut. Saudi Arabia’s Saudi Aramco said that it will cut October prices for all crude grades sold to Asia by at least $1 a barrel. The weaker US Job market data has also pressured oil prices on expectations of slower demand recovery.
Crude oil prices are expected to trade sideways to down for the day with resistance at $70 and support at $67 per barrel. MCX Crude oil September has support at Rs 4,960, resistance at Rs 5,080.
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