MCX Crude oil falls 1.77% to Rs 4,432/barrel this week; expert suggests buy for a target of Rs 4,500

Crude oil futures dropped marginally to settle at Rs 4,432 per barrel on April 9 as participants reduced their positions as seen by the open interest. The commodity traded with marginal weakness owing to reports of rising supplies from major producers and firm dollar.

It ended the week with a loss of Rs 80 or 1.77 percent on the domestic bourse. Crude prices fell in three out of the five trading sessions on the MCX.

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 49.50, indicating sideways momentum in prices.

Talks to resurrect a nuclear deal with Iran raise the possibility of sanctions against Iran's oil exports being lifted.

The US Energy Information Administration (EIA) reported that US crude oil inventories decreased by 3.52 million barrels for the week ended April 2 against a forecast of 1.43 million barrels decline. However, gasoline inventories jumped 4 million barrels indicating demand waning in the world’s biggest oil market.

The number of rigs drilling crude oil in the US remained unchanged at 337 rigs for the week to April 9, the highest since April 2020, said Baker Hughes in a weekly report. 

“The Crude oil prices are consolidating in the Rs 200 range, it is taking constant support near Rs 4,200 while taking the resistance near Rs 4,500 levels. The trader should play for short-range only in the crude oil for the coming week. The recent OPEC decision of production increases could be bearish for this market, but on the other hand, you have people hoping for the reflation trade to drive up demand so prices may remain in the range”, Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited.

West Texas Intermediate crude slipped 0.44 percent to settle at $59.34 per barrel, while Brent crude, the London-based international benchmark edged lower 0.30 percent to $63.01 per barrel.

MCX iCOMDEX Crude Oil Index eased 4.49 points, or 0.09 percent to close at 4,983.22.

In the futures market, crude oil for April delivery touched an intraday high of Rs 4,476 and an intraday low of Rs 4,420 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 slipped by Rs 6, or 0.14 percent, to end at Rs 4,432 per barrel with a business turnover of 4,131 lots. 

Crude oil delivery for May sdipped by Rs 7, or 0.16 percent to Rs 4,448 per barrel with a business volume of 383 lots.

The value of April and May’s contracts traded on April 9 was Rs 3,679.85 crore and Rs 61.79 crore, respectively.

Next Week Strategy

"For the next week, traders should make a buy position in the MCX Crude oil future. The ideal range to enter into any buy position should be around Rs 4,270- Rs 4330, for the target beyond Rs 4,500 and keeping a stop loss at Rs 4,170," said Purohit.

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