Crude oil falls 0.34% to Rs 4,429/barrel on demand concerns, Brent trades below $63

Source: Reuters

Source: Reuters

Crude oil futures fell to Rs 4,429 per barrel on April 8 as participants increased their short positions as seen by the open interest. Crude oil declined on rising US gasoline inventories and fears that coronavirus outbreak will weaken a global recovery in fuel demand.

The energy commodity traded in the red after a gap-down start in the afternoon session, tracking weak 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 49.59 indicating sideways momentum in prices.

The US Energy Information Administration (EIA) reported that US crude oil inventories decreased by 3.52 million barrels for the week ended April 2 against a forecast of 1.43 million barrels decline. However, gasoline inventories jumped 4 million barrels indicating demand waning in the world’s biggest oil market.

“NYMEX crude trades modestly lower near $ 59.5/bbl. Weighing on crude price is stability in US dollar post FOMC minutes, rising virus cases, efforts to ease US-Iran tensions and OPEC’s decision to raise output in coming months. However, supporting price is bigger than expected decline in US crude stocks and general optimism about the US and global economy and forecast of wide deficit. Crude may witness choppy trade amid mixed factors however general bias remains on the downside owing to rising virus cases”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

West Texas Intermediate crude was down 0.75 percent to $ 59.52 per barrel, while Brent crude, the London-based international benchmark eased 0.47 percent to $ 62.86 per barrel.

MCX iCOMDEX Crude Oil Index fell 15.73 points, or 0.31 percent, at 4,978.72 at 16:11.

In the futures market, crude oil for April delivery touched an intraday high of Rs 4,475 and an intraday low of Rs 4,394 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 slipped by Rs 15, or 0.34 percent, to Rs 4,429 per barrel at 16:12 hours IST with a business turnover of 6,673 lots. 

Crude oil delivery for May slipped by Rs 15, or 0.34 percent to Rs 4,446 per barrel with a business volume of 318 lots.

The value of April and May’s contracts traded so far is Rs 1,774.39 crore and Rs 31.22 crore, respectively.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices witnessed selling with an unexpected rise in US gasoline inventories despite a drawdown in crude oil inventories. The EIA data showed that the weekly gasoline stockpile rose by 4.04 mb against a forecast of 0.21 mb draw. The weaker demand and ample supply have capped upside in oil prices.

Crude oil prices are expected to trade down for the day with resistance at $ 61 and support at $ 58 per barrel. MCX Crude oil April has support at Rs 4,340, resistance at Rs 4,480.

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