Crude oil futures rise 1.55% to Rs 4,452/barrel on US stimulus hopes, inventory drawdown



Crude oil futures climbed nearly 1.6 percent to Rs 4,452 per barrel on April 1 on higher drawdown of US inventory, hopes of OPEC+ maintaining production cut in place and the US infrastructure spending plan.

The energy commodity extended gains after a gap-down start in the afternoon session tracking strong global cues.

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 49.51 indicating neutral momentum in prices.

The US Energy Information Administration (EIA) reported that US crude oil inventories fell by 900,000 barrels for the week ended March 26 against a forecast of 600,000 barrels increase.

Meanwhile, OPEC+ nations raised concerns that uncertainties may impact recovery in oil demand due to rising COVID-19 cases globally and lockdown measures. The Group lowered the demand growth forecast by 300,000 bpd ahead of the meet. 

Sunand Subramaniam, Senior Research Associate, Choice Broking said, “For the week ahead, we are expecting Global and MCX crude prices to witness roller coaster ride as series of lockdown in the European Union has led to demand damage in the global market. Moreover, American stockpiles have been reported to be higher at 3.91 million barrel over the week, which is expected to cap the global crude prices.

“Rising dollar index, bond yields and lockdowns in Asian countries have added worries regarding the demand scenario. Although ongoing OPEC+ member meeting is forecasted to support prices from lower levels as market sentiments forecast for maintainable supply cut until June. But then oil prices are likely to remain sideways in the week ahead”, Subramaniam noted.

“NYMEX crude trades higher near $ 60.4/bbl supported by an unexpected decline in US crude oil stocks, expectations that OPEC may keep output steady and US stimulus plan. However, weighing on price is mixed with US economic data, rising virus cases, OPEC’s downward revision to demand estimates and rise in OPEC production. Mixed factors may keep crude choppy”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities

West Texas Intermediate crude was up 2.27 percent to $ 60.50 per barrel, while Brent crude, the London-based international benchmark climbed 2.06 percent to $ 64.03 per barrel.

MCX iCOMDEX Crude Oil Index soared 76.42 points, or 1.55 percent, at 5,003.44 at 15:47.

In the futures market, crude oil for April delivery touched an intraday high of Rs 4,456 and an intraday low of Rs 4,355 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 jumped Rs 68, or 1.55 percent, to Rs 4,452 per barrel at 15:48 hours IST with a business turnover of 6,153 lots. 

Crude oil delivery for May rose Rs 68, or 1.55 percent to Rs 4,466 per barrel with a business volume of 448 lots.

The value of April and May’s contracts traded so far is Rs 1,593.62 crore and Rs 23.08 crore, respectively.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices traded firm ahead of OPEC talks and expectations of output cut extension. Crude oil prices traded under pressure in previous trade on demand outlook worries after OPEC plus nations lowered oil demand forecast for the year 2021. The traders and investors weighed demand prospects against bullish weekly inventory data. The lockdown amid the third wave of virus cases in Europe and rising cases in India and Brazil has capped an upside in oil prices.

Crude oil prices are expected to trade up for the day with resistance at $ 63 and support at $ 60 per barrel. MCX Crude oil April has support at Rs 4350, resistance at Rs 4480.

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