Crude oil prices declined on concerns of weak economic growth in China, rising coronavirus cases and an increase in OPEC+ output. However, the oil prices were supported by a rapid rebound in India’s gasoline consumption and drawdown in US inventories.
The energy commodity in the negative after a gap-down start in the evening session tracking the bearish global trend.
On the MCX, crude oil delivery for August dropped Rs 73, or 1.32 percent, to Rs 5,444 per barrel at 18:17 hours IST with a business turnover of 6,313 lots. The delivery for September edged lower Rs 69, or 1.26 percent to Rs 5,415 per barrel with a business volume of 307 lots.
The value of August and September’s contracts traded so far is Rs 1,054.44 crore and Rs 36.48 crore, respectively.
West Texas Intermediate (WTI) crude fell 1.18 percent to $73.08 per barrel, while Brent crude, the London-based international benchmark, slipped 0.99 percent to $74.66 per barrel.
For the August crude options, the most active Call and Put strikes near the ATM’s are 5,200, 5,400, 5,500 and 5,300.
“Crude oil prices declined on Monday on worries over China's economic recovery after factory activity slipped sharply in the world's second-largest oil consumer with a rise in oil output from OPEC producers. Crude oil prices also traded under pressure with rising cases of Delta variant in US and China and other parts of the world,” said Tapan Patel- Senior Analyst (Commodities), HDFC Securities.
“Crude oil prices are expected to trade down for the day with resistance at $75 and support at $72 per barrel. MCX Crude oil August has support at Rs 5,380, resistance at Rs 5,510,” Patel noted.
Prathamesh Mallya, AVP Research Non-Agri Commodities and Currencies, Angel Broking Ltd said, “Bets on sustained growth in the global oil demand and a lower US Dollar might continue to support Oil prices in the coming week. Worries over a bleak demand outlook following the slow growth in China’s industrial sector amid increase Oil production by OPEC might weigh on Oil prices in today’s session.”
The CFTC data showed that money managers increased their net long positions by 4446 lots in last week.
The number of rigs drilling crude oil in the US fell by 2 to 385 for the week to July 30, said Baker Hughes in a weekly report.
Technicals
The black gold has been trading higher than 5, 20, 50, 100 and 200 days' simple moving averages and exponential moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 53.94, which suggests sideways movement in the prices.
Trading Strategy
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
MCX Crude oil prices traded with bearish momentum and have already declined more than 1.5 percent since the previous close. We may expect the prices to move with the same momentum in the evening session and the market may trade below Rs 5,400.
Geojit Financial Services
Crude oil witnessing long liquidation move likely to persist as long as price stays below Rs 5,480 region. But a direct rise above the same may be a sign of fresh buying in the coming session.
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