Crude oil futures slip 0.80% to Rs 4,714/barrel; WTI trades near $63/bbl


Crude oil futures dropped to Rs 4,714 per barrel on April 15 as participants trimmed their positions as seen by the open interest. Crude oil declined on surging coronavirus cases globally and tighter curb imposed by nations to curb the spread despite a sharp drawdown in US stockpiles.

The commodity has rallied sharply in the past few sessions and investors take out some profits.

The energy commodity traded extended decline after a flat to a gap-down start in the afternoon session tracking weak global cues.

The black gold has been trading higher than 5, 20, 50, 100 and 200 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 59.03 indicating bullish momentum in prices.

The US Energy Information Administration (EIA) reported that US crude oil inventories fell by 5.88 million barrels for the week ended April 9 against a forecast of 2.9 million barrels decline. However, gasoline inventories rose 309,000 barrels less than expectations against a 786,000-barrel rise.

The International Energy Agency (IEA) forecasted global oil demand and supply to rebalance in the second half of the year. It said that producers may need to pump an additional 2 million barrels per day to meet demand expectations.

“NYMEX crude trades marginally lower near $ 62.8/bbl. Weighing on crude price is rising virus cases and the prospect of higher OPEC supply in coming months. However, supporting price is bigger than expected decline in US crude oil stocks, upbeat global demand growth estimate by IEA and OPEC and renewed tensions relating to Iran as it boosts nuclear capacity.

“Crude oil has broken out of recent range indicating upward momentum however a sharp rise is difficult until virus situation improves”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

West Texas Intermediate crude was down 0.52 percent to $ 62.82 per barrel, while Brent crude, the London-based international benchmark fell 0.44 percent to $ 66.29 per barrel.

MCX iCOMDEX Crude Oil Index decreased 34.71 points, or 0.65 percent, at 5,301.18 at 16:07.

In the futures market, crude oil for April delivery touched an intraday high of Rs 4,772 and an intraday low of Rs 4,695 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 Rs 38, or 0.80 percent, to Rs 4,714 per barrel at 16:08 hours IST with a business turnover of 5,007 lots. 

Crude oil delivery for May eased Rs 32, or 0.67 percent to Rs 4,734 per barrel with a business volume of 3,341 lots.

The value of April and May’s contracts traded so far is Rs 643.59 crore and Rs 326.39 crore, respectively.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices pared previous gains on worries over rising COVID cases in emerging markets including India and Brazil. Earlier, oil prices rallied after the EIA report showed a larger than expected inventory draw. The weekly crude oil stockpiles fell by 5.89 mb as per the EIA data. The chatter over Iran’s uranium enrichment may add some risk premium to the prices over geopolitical worries.

Crude oil prices are expected to trade sideways to down for the day with resistance at $ 64 and support at $ 60 per barrel. MCX Crude oil April has support at Rs 4,650, resistance at Rs 4,770.

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