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Crude oil rises 1.30% on MCX this week; outlook brightens on US infra plan, OPEC+ gradual hike

Many of the big commodity funds have taken to the sidelines ahead of the long Easter holiday weekend, resulting in low volume.

Mumbai / April 03, 2021 / 03:51 PM IST

Crude oil futures moved higher to settle at Rs 4,516 per barrel on April 1 as participants increased their long positions as seen by the open interest. Crude oil rebounded on increasing US infrastructure spending plan, a higher drawdown of US inventory despite OPEC+ agreeing to a gradual increase in output.

It ended the week with a gain of Rs 58 or 1.30 percent on the domestic bourse. Crude prices rose in two out of the four trading sessions on the MCX in a holiday-shortened week.

The black gold has been trading higher than 5, 50, 100 and 200 days' moving averages but lower than the 20-day moving average on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 52.07, indicating positive momentum in prices.

The US Energy Information Administration (EIA) reported that US crude oil inventories fell by 900,000 barrels for the week ended March 26 against a forecast of 600,000 barrels increase.

The number of rigs drilling crude oil in the US increased by 13 to 337 rigs for the week to April 1, the highest since April 2020, said Baker Hughes in a weekly report. The rigs count rose for the third straight week.

Close

“Crude oil prices traded volatile during the week on demand growth concerns and OPEC supply talks. Crude oil prices traded volatile falling below $60 per barrel as rising pandemic worries raised concerns over fuel demand recovery. Prices rebounded sharply thanks to a fall in dollar and US infrastructure boost with broad-based buying in commodities. Crude oil prices rallied the most on Thursday after OPEC plus nations agreed to hike oil output by 0.35 mb per day in May-June and 0.40 mb per day in July. Traders and investors boosted buying after OPEC assurance of balanced oil market”, said Tapan Patel- Senior Analyst (Commodities), HDFC Securities.

Patel expects crude oil prices to trade sideways to higher with resistance at $65 per barrel with support at $59 per barrel. MCX Crude oil April contract has important support at Rs 4,350 and resistance at Rs 4,670 per barrel.

Also read: Interview| Demand for fossil fuels is here to stay; oil demand will peak only around 2040: S&P Global Platts

West Texas Intermediate crude was up 3.62 percent to settle at $61.30 per barrel, while Brent crude, the London-based international benchmark modestly edged up 0.05 percent to $64.67 per barrel.

MCX iCOMDEX Crude Oil Index surged 146.10 points, or 2.97 percent to close at 5,073.12.

In the futures market, crude oil for April delivery touched an intraday high of Rs 4,528 and an intraday low of Rs 4,332 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 jumped Rs 132, or 3.01 percent, to end at Rs 4,516 per barrel with a business turnover of 5,151 lots. 

Crude oil delivery for May gained Rs 137, or 3.12 percent to Rs 4,535 per barrel with a business volume of 479 lots.

The value of April and May’s contracts traded on April 1 was Rs 10,195.26 crore and Rs 132.20 crore, respectively.

Next Week Outlook

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

Strategy: For the next week, traders should look forward for buy-on-dips approach for MCX Crude oil future from the support of 15-SMA of intraday chart placed at Rs 4423 – Rs 4410, keeping a stop loss around Rs 4225, aiming for the target at Rs 4730 – Rs 4780.

Rationale: The WTI Crude Oil market tried to rally during Thursday's trading session, but then gave up those profits, dropping below the $60 level. Traders are waiting for OPEC and its allies to make a big policy decision. Many of the big commodity funds have taken to the sidelines ahead of the long Easter holiday weekend, resulting in low volume. In order to stabilise markets and minimise oversupply, the new deal cuts just over 7 million barrels per day. Saudi Arabia has also agreed to add an extra 1 million barrels per day to those reductions.

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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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