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Crude oil soars to fresh high since October 16, 2018 on demand recovery hopes, Brent inches closer to $73/bbl

Crude oil prices are expected to trade sideways to higher for the day with resistance at $72 and support at $68 per barrel.

Mumbai / June 09, 2021 / 05:58 PM IST
crude oil

crude oil

Crude oil futures climbed to fresh 52-week high and highest level since October 16, 2018, on optimism about fuel demand recovery and a sharp drawdown in US stockpiles. The oil price was supported by comments from the US official that sanctions on Iran would remain in place even if the United States reach a nuclear deal with Iran.

The crude price traded in the positive territory after a gap-up start, tracking firm global trend.

On the MCX, crude oil delivery for June soared Rs 30, or 0.59 percent, to Rs 5,119 per barrel at 16:09 hours IST with a business turnover of 12,089 lots. The delivery for July jumped Rs 33, or 0.65 percent to Rs 5,123 per barrel with a business volume of 1,226 lots.

The value of June and July’s contracts traded so far is Rs 692.75 crore and Rs 34.09 crore, respectively.

West Texas Intermediate (WTI) crude was up 0.16 percent to $70.16 per barrel, while Brent crude, the London-based international benchmark, gained 0.15 percent to $72.33 per barrel.

Close

“NYMEX crude trades modestly higher near $70.2/bbl Crude trades near Oct.2018 highs supported by reduced expectations of Iran’s supply coming online soon, US easing of travel restrictions to certain countries and upbeat US jobs openings report. API weekly report was mixed as it noted a decline in US crude stocks but an increase in gasoline and distillate stocks. Crude may hold on to the gain ahead of the inventory report due later today”, said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Crude oil prices rose above $70 at its highest since Oct. 2018 on the strong demand outlook. The API report showed that weekly US crude oil stockpiles fell by 2.1 mb in last week. The ease in lockdown measure with large scale vaccination programs has boosted demand outlook for oil.”

Market participants will take further cues from US EIA weekly inventory data to be released later in the day. 

The American Petroleum Institute (API) reported that US crude inventories fell by 2.1 million barrels for the week ended June 4. Gasoline inventories rose by 2 million barrels and distillate stocks climbed by 3.8 million barrels.

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 67.50, indicating upbeat movement in prices.

Trading Strategy

Crude oil prices are expected to trade sideways to higher for the day with resistance at $72 and support at $68 per barrel. MCX Crude oil June has support at Rs 5,060, resistance at Rs 5,180, said Patel.

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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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