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Crude oil prices modestly up on tight supplies, strong demand outlook; Brent trades near $74 a barrel

Crude may remain range-bound ahead of inventory report however demand concerns may keep pressure on prices.

Mumbai / July 27, 2021 / 05:31 PM IST

Crude oil prices were trading with marginal gains due to tight supplies, lower US stocks and a surge in COVID vaccination across the globe. The oil prices were also supported by strong equity earnings and delays in US-Iran talks.

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

On the MCX, crude oil delivery for August rose Rs 14, or 0.26 percent, to Rs 5,370 per barrel at 16:44 hours IST with a business turnover of 6,378 lots. The delivery for September gained Rs 23, or 0.43 percent to Rs 5,343 per barrel with a business volume of 209 lots.

The value of August and September’s contracts traded so far is Rs 733.95 crore and Rs 8.70 crore, respectively.

West Texas Intermediate (WTI) crude jumped 0.28 percent to $72.11 per barrel, while Brent crude, the London-based international benchmark, soared 0.38 percent to $73.98 per barrel.

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“NYMEX crude trades in a narrow range near $71.8/bbl. Supporting price is tightening supply outlook amid lower US crude stocks, OPEC’s decision to gradually raise output and delay in US-Iran talks. However, weighing on price are demand concerns amid rising virus cases, disappointing economic data and concerns about the health of the Chinese economy. Crude may remain range-bound ahead of inventory report however demand concerns may keep pressure on prices”, said Ravindra Rao, CMT, EPAT-Quantinsti, Head - Commodity Research at Kotak Securities Ltd.

After the sharp volatility last week, crude oil is holding in a range above $70/bbl which reflects that market participants are awaiting fresh triggers.

Global demand for key oil-based fuels has rebounded sharply this year despite growing concerns over outbreaks of the so-called Delta COVID-19 variant. During the first seven months of the year, demand for key fuels is estimated to have risen by 5.5 million b/d or 9%, according to S&P Global Platts Analytics. While demand for jet fuel remains below pre-COVID levels due to ongoing travel curbs, heavy fuel oil is already above comparable 2019 levels supported by a resilient shipping sector and robust power sector demand in many key economies, it added.

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 52.17, which indicates a neutral movement in the prices.

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Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices traded higher outweighing the concerns of rising virus cases. Crude oil prices pared previous losses on strong demand outlook in the second half of the year despite production hike from OPEC plus nations. The strong equity earning season has also boosted investor sentiment in crude oil.

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. 5280, resistance at Rs.5450.

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

MCX Crude oil is trading on a positive note after a session where the price traded in a choppy manner. The market is resisting below Rs 5,400 levels and we may witness a breach of these levels during the evening session. On the downside, support is at Rs 5,300-5,270 levels.

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Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Sandeep Sinha

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