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Crude oil scales to fresh 52-week high on fuel demand recovery hope; speculators raise net long positions

Crude oil prices rose on fuel demand recovery hopes from the US, China and Europe with ease in lockdown measures and reopening of the economic activities.

Mumbai / June 14, 2021 / 04:54 PM IST

Crude oil futures surged to a fresh 52-week high on expectations over revival global fuel demand on increasing pace of vaccination in the US and Europe leading to higher mobility. The oil price was supported by the ease in lockdown measures, lower supply from OPEC and delay in Iranian crude returning to the market.

On the MCX, crude oil delivery for June jumped Rs 24, or 0.46 percent, to Rs 5,226 per barrel at 16:15 hours IST with a business turnover of 11,698 lots. The delivery for July climbed Rs 25, or 0.48 percent to Rs 5,215 per barrel with a business volume of 1,760 lots.

The value of June and July’s contracts traded so far is Rs 643.03 crore and Rs 47.40 crore, respectively.

West Texas Intermediate (WTI) crude gained 0.71 percent to $71.41 per barrel, while Brent crude, the London-based international benchmark, rose 0.77 percent to $73.25 per barrel.

“NYMEX crude trades higher near $71.5/ per barrel supported by expectations of higher demand, slow supply from OPEC and delay in Iran’s nuclear deal negotiations. However, gains might get capped amid a rise in US crude rig count to April 2020 highs and strength in US dollar ahead of Fed meeting. Crude may continue to hold firm on demand optimism however mixed factors could make it vulnerable to profit-taking,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

Close

Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Crude oil prices traded higher sustaining above $70 per barrel. Crude oil prices rose on fuel demand recovery hopes from the US, China and Europe with ease in lockdown measures and reopening of the economic activities. The Vehicle traffic is returning to pre-pandemic levels in North America and much of Europe.”

Crude oil speculators raised their net long US crude futures and options positions by 27,853 contracts to 410,092 in the week to June 8, the US CFTC data showed.

The number of rigs drilling crude oil in the US jumped by 6 to 365 for the week to June 11, the highest since March 27, 2020, said Baker Hughes in a weekly report.

Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd said, “Gains for Oil were capped as reports from the Energy Information Administration stated that the US fuel inventory surged by 7 million barrels last week while the distillate stocks rose by 4.4 million barrels. Spike in US gasoline inventory masked the significant fall in US Crude stocks and kept the prices in check.”

Moreover, China’s Crude imports dipped by 14.6 percent in May’21 (YoY) as maintenance at Chinese refineries amid the stern environmental norms limited their Oil consumption, he said.

Technicals

The black gold has been trading higher than 5, 20, 50, 100 and 200 days' simple moving averages and exponential moving averages on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 71.95, indicating bullish movement in prices.

Trading Strategy

Crude oil prices are expected to trade up for the day with resistance at $74 and support at $70 per barrel. MCX Crude oil June has support at Rs 5,120, resistance at Rs 5,310.

NS Ramaswamy, Head of Commodities, Ventura Securities

Ventura Securities Ventura Securities

MCX CRUDEOIL JUN prices have broken above the key resistance level of Rs 5,000 on the weekly chart. The RSI indicator on daily and weekly charts is suggesting strength in the momentum on the upside. Any dip in the prices can be used as a buying opportunity to follow the further trend. On the downside, Rs 4,950 is the immediate support for the prices.

He suggests his clients buy MCX Crude Oil June in the range of Rs 5,150-5,140 for the target of Rs 5,400-5,500 with a stop loss below Rs 4,950.

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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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