Crude oil futures soared on May 21 after three straight days of consecutive losses, but on track to report weekly loss since March. The oil price recovered and extended gain in the evening session tracking firm global cues, rally in equity markets and improving virus situation in Europe and the US.
On the MCX, crude oil delivery for June climbed Rs 76, or 1.67 percent, to Rs 4,626 per barrel at 18:37 hours IST with a business turnover of 6,971 lots. While delivery for July edged higher Rs 70, or 1.53 percent to Rs 4,640 per barrel with a business volume of 350 lots.
The value of June and July’s contracts traded so far is Rs 2,188.46 crore and Rs 31.74 crore, respectively.
West Texas Intermediate (WTI) crude was up 2.16 percent to $ 63.28 per barrel, while Brent crude, the London-based international benchmark rose 1.80 percent to $ 66.28 per barrel.
“NYMEX crude trades around 1% higher near $ 62.4/bbl. Crude stabilized amid some recovery in the US equity market and amid improving virus situation in the US and Europe. However, weighing on price is rising virus cases in Asia, mixed economic data, easing Israel-Palestine tensions and the prospect of higher Iranian supply.
Crude plunged sharply, however, we may see some recovery if the US equity market manages to build on yesterday’s gain”, Ravindra Rao, CMT, EPATVP-Head Commodity Research, Kotak Securities Ltd.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Crude oil prices pare some of the previous losses on Friday while prices are set to report biggest weekly loss since March. Crude oil prices witnessed a sell-off on higher inflation worries and deemed demand outlook due to rising virus cases in Asia. Crude oil prices are trading lower as traders and investor are weighing progress over Iran nuclear talks.”
The United States and Iran are getting closer to renewing a 2015 nuclear agreement that would relieve sanctions on Iran’s oil, banking and shipping industries boosting Iranian crude production which could bring down oil prices.
Crude prices were supported by higher demand from the US and Europe during summer with easing virus-related restrictions. However, concerns about demand outlook in Asia weighed on prices due to resurging coronavirus cases.
Technicals
The black gold has been trading higher than 50, 100 and 200 days’ moving averages but lower than the 5 and 20 days’ moving average on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 47.06, indicating sideways movement in prices.
Trading Strategy
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 June has support at Rs 4,480, resistance at Rs 4,630, said Patel.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX Crude Oil June opened on a flat note after prices declined more than 100 points in the previous session and tested the support of Rs 4,590-4,560 levels. Market breached this support zone but could not sustain below them leading to a rise in prices.
Axis Securities advised its clients to sell May crude oil at Rs 4,600 with a stop loss at Rs 4,650 and a target of Rs 4,530.
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