MCX Crude oil futures for March series scale a fresh high of Rs 4,635 per barrel

Crude oil

Crude oil

MCX Crude oil futures for the March series surged to a fresh high of Rs 4,635 per barrel on February 25. Crude oil edged higher on sharp fall in US crude stockpiles after a deep freeze disrupted production last week.

Crude oil has continued to set new highs indicating general positive momentum; however, mixed trade in the last few sessions shows signs of exhaustion.

The US Energy Information Administration (EIA) reported that US crude oil inventories fell by 1.1 million barrels per day to 9.7 million bpd for the week ended February 19, the lowest since January 2018 as cold weather engulfed key production regions like Texas.

The 12-month Brent spread is quickly approaching a backwardation of $ 7/bbl. This steepening of the forward curve is increasing roll yields, and so making oil an increasingly attractive option for investors.

The black gold has been trading higher than 5, 20, 50, 100 and 200 days’ moving averages on the daily chart. The Relative Strength Index (RSI) is at 78.33 which indicates the price is nearing the overbought level.

“NYMEX crude trades marginally higher near $ 63.6/bbl as market players focus on a drop in US crude production as against unexpected buildup in US crude and gasoline stocks. Also, supporting crude price is a sharp rise in the US equity market and expectations that OPEC+ may not destabilize the market by any major change in production policy. Crude continues to hit new highs with a focus on improving demand outlook however improving US weather may limit gains”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

West Texas Intermediate crude was up 0.35 percent to $ 63.44 per barrel, while Brent crude, the London-based international benchmark, climbed 0.48 percent to $ 66.50 per barrel.

MCX iCOMDEX Crude Oil Index jumped 46.38 points, or 0.90 percent, at 5,214.72 at 15:41.

In the futures market, crude oil for March delivery touched an intraday high of Rs 4,635 and an intraday low of Rs 4,576 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 3,800 and a high of Rs 4,635.

Crude oil delivery for March gained Rs 41, or 0.90 percent, to Rs 4,609 per barrel at 15:42 hours IST with a business turnover of 6,492 lots. 

Crude oil delivery for April edged higher by Rs 43, or 0.94 percent to Rs 4,622 per barrel with a business volume of 129 lots.

The value of March and April’s contracts traded so far is Rs 891.82 crore and Rs 6.74 crore, respectively.

Trading strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices rallied in the previous session despite bearish weekly inventory data. The lower supply concerns with impacted oil output due to cold storm in Texas boosted buying in oil prices.

We expect crude oil prices to trade sideways to higher with support at $ 62 and resistance at $ 65. MCX Crude oil March has support at Rs 4,570 and resistance at Rs 4,710.

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