Crude oil futures were steady to Rs 4,721 per barrel on May 3 as participants increased their long positions as seen by the open interest. Crude oil declined on surging coronavirus cases in India and the possibility of higher supply from OPEC and Iran in the coming month.
India has been reporting over 3 lakh cases for the past many days and fuel demand fell 7 percent in April as local restrictions imposed by the administration to curb the spread of coronavirus stifled demand.
The energy commodity traded in the red after a gap-down start on muted global cues.
The black gold has been trading higher than 20, 50, 100 and 200 days’ moving averages but lower than the 5-day moving average on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 55.93 indicating upbeat movement in prices.
The number of rigs drilling crude oil in the US fell by 1 to 342 rigs for the week to April 30, said energy services firm Baker Hughes in a weekly report.
Money managers raised their net long US crude futures and options positions by 15,225 contracts to 387,394 in the week to April 27, data from US CFTC showed.
Crude prices were supported by the summer driving season starting in the US, the UK and China and consumption of fuel could improve and lend support to prices.
“NYMEX crude trades marginally lower near $ 63.3/bbl. Weighing on price is a rise in OPEC’s output last month, rise in virus cases in India, lower Japanese imports and prospect of higher supply from OPEC and Iran in coming months. Crude may reflect volatility in the larger financial market; however, a sharp rise is unlikely until the virus situation is under control,” said Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities.
West Texas Intermediate crude was marginally up 0.06 percent to $ 63.62 per barrel, while Brent crude, the London-based international benchmark eased 0.18 percent to $ 66.64 per barrel.
MCX iCOMDEX Crude Oil Index decreased 2.24 points, or 0.04 percent, at 5,285.51 at 16:23.
In the futures market, crude oil for May delivery touched an intraday high of Rs 4,747 and an intraday low of Rs 4,687 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 4,863.
Crude oil delivery for May slightly dropped Rs 2, or 0.04 percent, to Rs 4,721 per barrel at 16:24 hours IST with a business turnover of 6,155 lots.
Crude oil delivery for June is marginally up by Rs 1, or 0.02 percent to Rs 4,739 per barrel with a business volume of 339 lots.
The value of May and June’s contracts traded so far is Rs 1,197.60 crore and Rs 14.62 crore, respectively.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices declined over demand growth worries from pandemic-hit India. The transport restrictions and lockdown measures may lower fuel consumption in India. Iran and the United States are in talks to revive a nuclear deal which could lead to a lifting of US sanctions that would allow Iran to ramp up oil exports.
Crude oil prices are expected to trade sideways to down for the day with resistance at $ 65 and support at $ 62 per barrel. MCX Crude oil May has support at Rs 4,650 and resistance at Rs 4,780.
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