MCX February crude oil futures scale new high of Rs 4,500, Brent trades above $65 a barrel

Crude oil

Crude oil

Crude oil futures edged higher to Rs 4,388 per barrel on February 18 after hitting a fresh intraday high for February series of Rs 4,500 on the MCX. Crude oil rose on higher drawdown of US crude stockpiles and as cold weather in Texas shut production across the largest US crude producing state.

The US deep freeze has closed an estimated 1 million barrels a day of production and is expected to disrupt production for several days or maybe weeks.

The American Petroleum Insitute (API) reported that US crude inventories dropped 5.8 million barrels to 468 million barrels for the week ended February 12.

“NYMEX crude has given up some gains as it is trading 0.40% higher as compared to 1% in the early session. Crude is supported by API weekly report which noted a bigger than expected decline in US crude oil stocks. Also supporting price is severe cold weather in the US which has impacted production and some upbeat US economic data. However, weighing on price is a prospect of higher OPEC output and weather forecasts showing improved weather in the US in the coming days. Crude oil continues to build on its relentless rally and price may remain firm ahead of an inventory report. However there may be some profit-taking before the release of the report”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

West Texas Intermediate crude slightly up 0.21 percent to $ 61.27 per barrel, while Brent crude, the London-based international benchmark gained 0.22 percent to $ 64.48 per barrel.

MCX iCOMDEX Crude Oil Index inched higher 39.60 points, or 0.79 percent, at 5,056.33 at 15:55.

In the futures market, crude oil for February delivery touched an intraday high of Rs 4,500 and an intraday low of Rs 4,451 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 3,486 and a high of Rs 4,500.

Crude oil delivery for February gained Rs 38, or 0.86 percent, to Rs 4,452 per barrel at 15:56 hours IST with a business turnover of 4,758 lots. 

Crude oil delivery for March rose Rs 32, or 0.72 percent to Rs 4,466 per barrel with a business volume of 1,101 lots.

The value of February and March’scontracts traded so far is Rs 997.71 crore and Rs 82.96 crore, respectively.

Trading strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices rallied to 13 month high levels on fuel demand recovery hopes over vaccine rollouts and positive economic data from the US. The cold snap in Texas has shut some of oil production facilities which may support oil prices to trade firm. 

We expect crude oil prices to trade higher with support at $ 60 and resistance at $ 63. MCX Crude oil February has support at Rs 4,430, resistance at Rs 4,550.

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