Crude oil prices up on supply concerns, higher demand; WTI trades above $70/bbl

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Crude oil prices traded firm on US supply tightness, feeble dollar and rising COVID-19 vaccination across the globe. The oil price was aided by a rebound in the Chinese’s economy, higher demand and improved risk sentiment.

The energy commodity has traded in the green since morning, tracking the positive global trend.

On the MCX, crude oil delivery for October jumped Rs 14, or 0.27 percent, to Rs 5,224 per barrel at 18:31 hours IST with a business turnover of 4,455 lots. The delivery for November edged higher Rs 14, or 0.27 percent to Rs 5,214 per barrel with a business volume of 79 lots.

The value of October and November’s contracts traded so far is Rs 797.35 crore and Rs 6.06 crore, respectively.

West Texas Intermediate (WTI) crude rose 0.56 percent to $70.53 per barrel, while Brent crude, the London-based international benchmark, gained 0.47 percent to $74.27 per barrel.

Prathamesh Mallya, AVP Research Non-Agri Commodities and Currencies, Angel Broking Ltd said, “Slow resumption of the production capacities in the U.S. Gulf of Mexico following two hurricanes and bets over increasing global demand underpinned Oil prices last week.”

“Markets are expected to remain cautious ahead of the US Federal Reserve policy meet which begins today for cues on their monetary stance in the months ahead”, he added.

The downside in oil prices was limited after reports suggested that some of the oil producing units in the Gulf of Mexico are expected to remain offline until the end of this year due to damage from Hurricane Ida.

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 the daily chart. The momentum indicator Relative Strength Index (RSI) is at 54.46, which indicates neutral movement in the prices.

Trading Strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices rebounded on Tuesday gaining above $70 per barrel on US supply concerns. The traders and investors responded to the supply tightness in the US due to higher oil demand compare to gas and coal. However, market players are also assessing the potential impact on China’s economy of a crisis at heavily indebted property group China Evergrande. 

Crude oil prices are expected to trade up for the day with resistance at $73 and support at $70 per barrel. MCX Crude oil October has support at Rs. 5180, resistance at Rs. 5340.

Geojit Financial Services

The brokerage firm said slippage below Rs 5,170 may be a sign of intraday weakness. Inability to challenge below the same may bid fresh buying in the coming session towards higher.

For all commodities-related news, click here

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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