Crude oil futures traded with marginal gains despite the spread of coronavirus in most parts of Asia. The economic recovery in the United States and Europe on the back of increasing rate of COVID-19 vaccination has led to a surge in demand.
On the MCX, crude oil delivery for May gained Rs 23, or 0.48 percent, to Rs 4,809 per barrel at 19:04 hours IST with a business turnover of 3,011 lots. While delivery for June soared Rs 29, or 0.60 percent to Rs 4,833 per barrel with a business volume of 4,524 lots.
The value of May and June’s contracts traded so far is Rs 1,024.33 crore and Rs 593.58 crore, respectively.
West Texas Intermediate (WTI) crude was up 0.73 percent to $ 65.84 per barrel, while Brent crude, the London-based international benchmark rose 0.58 percent to $ 69.11 per barrel.
“Crude oil prices kept firm trading range on demand growth prospectus with re-opening of economic activities in Europe and UK. However, worries on record cases in India and weak data from the US and China has capped prices for the day. Crude oil prices are facing strong resistance near $ 68 with balanced market”, Tapan Patel- Senior Analyst (Commodities), HDFC Securities.
“Crude oil prices are expected to trade sideways to up for the day with resistance at $ 68 and support at $ 64 per barrel. MCX Crude oil May has support at Rs 4,720, resistance at Rs 4,860” Patel added.
The number of rigs drilling crude oil in the US increased by 8 to 352 for the week to May 14, the highest since April 2020, said Baker Hughes in a weekly report.
US CFTC data showed money managers cut their net long US crude futures and options position by 19,321 contracts to 381,947 in the week to May 11.
Also read: Crude oil outlook turns bullish on recovering demand, analysts expect higher levels
Technicals
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 61.23, indicating bullish movement in prices.
Trading Strategy
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited
We may expect the market to rise and test Rs 4,865-4,890 levels on the upside during the later part of the day after a positive start.
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