Source: Reuters
Crude oil futures traded with marginal losses riding on surplus US crude oil inventory buildup and ongoing Iran nuclear talks. However, oil prices stayed within range as optimism about the United States and Europe summer driving season offsetting demand worries in India.
On the MCX, crude oil delivery for June fell Rs 9, or 0.19 percent, to Rs 4,814 per barrel at 19:50 hours IST with a business turnover of 7,894 lots. While delivery for July slipped Rs 5, or 0.10 percent to Rs 4,818 per barrel with a business volume of 345 lots.
The value of June and July’s contracts traded so far is Rs 2,272.28 crore and Rs 19.30 crore, respectively.
West Texas Intermediate (WTI) crude was slightly down 0.16 percent to $ 66.17 per barrel, while Brent crude, the London-based international benchmark eased 0.25 percent to $ 68.56 per barrel.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Crude oil prices fluctuated ahead of weekly inventory data and ongoing Iran nuclear talks. The traders and investors remained wary of mixed fundamentals which have kept oil prices in a range. The weaker dollar and broad buying in commodities have supported oil prices while the expectation of bullish weekly inventory data may side-line Iranian supply pressure.”
“The progress in the nuclear deal between US & Iran was the point of focus for markets as it could lead to a lifting of sanctions from the Iranian energy industry. If the deal works out it would bring about 1 million to 2 million barrels per day (bpd) in additional oil supply to the global markets which weighed on investors sentiments and capped the gains for Crude”, said Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd.
Also, increasing cases of COVID-19 in India, one of the largest consumer of oil globally and prospects of weak demand from China pressured oil prices, he said.
The US Energy Information Administration (EIA) reported that US crude oil inventories declined by 1.66 million barrels for the week ended May 21.
Further weighing on the price is choppiness in equity markets and continuing debate whether strong growth and rising price pressure may cause central banks to tighten monetary policy.
Technicals
The black gold has been trading higher than 5, 20, 50, 100 and 200 days’ simple moving averages and exponential moving average on a daily chart. The momentum indicator Relative Strength Index (RSI) is at 55.14, indicating positive movement in prices.
Trading Strategy
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 June has support at Rs 4,760, resistance at Rs 4,890, said Patel.
MCX Crude is trading near strong support of descending triangle pattern, price is expected to trade negatively, said Axis Securities. Any breakdown below Rs 4,765 would drag the price lower towards Rs 4,700/4,680 levels in intraday.
Axis Securities
The momentum indicator RSI is trading at 44 on the hourly chart and it is forming lower lows which is a bearish sign, it added.
Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited said, “MCX June Crude oil has been trading with a marginal sideways and negative bias. If prices decline below Rs 4,765 levels and sustain below then, we may expect them to test Rs 4,700 levels on the downside.”
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