Crude oil futures gain 0.56%, Brent trades above $43 a barrel

Crude oil futures jumped to Rs 3,049 per barrel on July 6 due to build-up of long position by participants, tight supplies and better economic data from the US.

Tapan Patel, Senior Analyst (Commodities), HDFC Securities, said crude oil prices witnessed buying on July 6 in line with positive equity indices. "Tightened supplies with recent inventory drawdown and fall in rig count in the US has led to firm oil prices. Expectations of strong PMI numbers from the US have also boosted investment sentiments after the previous week's positive economic data."

Ravindra Rao, VP- Head Commodity Research at Kotak Securities, said the recent recovery in oil prices is mainly due to the production cuts from OPEC+ as well as the US. "Also hopes of a recovery in demand has pushed oil price higher. If coronavirus cases continue to rise, the bull camp may be worried, which might pull prices lower again. Technically, if the bulls fail in sustaining the prices above $42/bbl, a corrective dip can’t be ruled out."

In the futures market, crude oil for July delivery touched an intraday high of Rs 3,074 and an intraday low of Rs 3,012 per barrel on the Multi-Commodity Exchange (MCX). So far in the current series, black gold has touched a low of Rs 1,655 and a high of Rs 3,153.

Crude oil futures for July delivery gained Rs 17, or 0.56 percent, to Rs 3,051 per barrel at 15:13 hours IST on a business turnover of 5,049 lots.

The same for August delivery jumped Rs 6, or 0.20 percent, to Rs 3,074 per barrel on a business volume of 114 lots.

The value of July and August's contracts traded so far is Rs 995.60 crore and Rs 4.11 crore, respectively.

Patel expects oil prices to trade sideways to up for the day with support at $39 and resistance at $42. "MCX July Crude Oil futures has support at Rs 2,990 with resistance at Rs 3,110."

West Texas Intermediate crude rose 0.32 percent at $40.78 per barrel, while Brent crude, the London-based international benchmark, was up 1.43 percent to $43.41 per barrel.

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