Source: Reuters
Crude oil futures plunged to Rs 4,590 per barrel on April 22 as participants increased their short positions as seen by the open interest. Crude oil slipped on a jump in US crude inventories and concerns regarding surging coronavirus cases in India and Japan to weaken fuel demand.
Crude oil continued to decline on reports of a nuclear deal by May for Iran that would take US sanctions off from the Persian nation which could boost its exports by 2 million barrels per day or more oil to the market.
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 and 200 days’ moving averages but lower than the 20, 50, 100 days’ moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 36.37, indicating bearish movement in prices.
The US Energy Information Administration (EIA) reported that US crude oil inventories jumped by 594,000 barrels for the week ended April 16 against a forecast of 2.97 million barrels decline. While gasoline inventories rose 86,000 barrels to 235 million barrels.
“NYMEX crude trades about 0.4% lower near $ 61.1/bbl pressurized by an unexpected rise in US crude oil stocks, worsening virus situation in India, the prospect of higher supply from Iran and positioning ahead of OPEC+ meeting next week where the group may reaffirm policy to gradually increase output. Crude may remain under pressure unless there is some improvement in virus situation”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
West Texas Intermediate (WTI) crude was down 0.59 percent to $ 60.99 per barrel, while Brent crude, the London-based international benchmark fell 0.69 percent to $ 64.87 per barrel.
MCX iCOMDEX Crude Oil Index decreased by 54.86 points, or 1.06 percent, to 5,137.72 at 16:54 pm.
In the futures market, crude oil for May delivery touched an intraday high of Rs 4,630 and an intraday low of Rs 4,561 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 4,219 and a high of Rs 4,847.
Crude oil delivery for April slipped by Rs 48, or 1.03 percent, to Rs 4,590 per barrel at 16:55 hours IST with a business turnover of 5,920 lots.
Crude oil delivery for May slipped by Rs 44, or 0.95 percent to Rs 4,607 per barrel with a business volume of 154 lots.
The value of April and May’s contracts traded so far is Rs 1,152.77 crore and Rs 12.81 crore, respectively.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices traded under pressure on worries over fuel demand recovery with a surge in virus cases across the globe. Crude oil prices witnessed selling after the EIA report showed a surprise build in the weekly inventories. The partial lockdown in India and rising cases in Japan and Brazil may keep oil prices under check due to economic slowdown.
Crude oil prices are expected to trade sideways to lower for the day with resistance at $ 63 and support at $ 59 per barrel. MCX Crude oil May has support at Rs 4,520 and resistance at Rs 4,630.
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