Crude oil prices continued uptrend for the third day and recovered losses suffered earlier in the week on improved risk sentiment and the prospect of a slowdown in shale activity in the US. However, the rising COVID cases of Delta variant may impact fuel demand.
The energy commodity recouped earlier loss and turned green after a gap-down start, tracking the firm global cues.
On the MCX, crude oil delivery for August rose Rs 53, or 1.01 percent, to Rs 5,305 per barrel at 16:39 hours IST with a business turnover of 5,837 lots. The delivery for September climbed by Rs 47, or 0.90 percent to Rs 5,266 per barrel with a business volume of 239 lots.
The value of August and September’s contracts traded so far is Rs 830.96 crore and Rs 16.02 crore, respectively.
West Texas Intermediate (WTI) crude jumped 0.92 percent to $70.92 per barrel, while Brent crude, the London-based international benchmark, gained 0.87 percent to $72.86 per barrel.
“NYMEX crude trades higher above $71/bbl. Earlier in the session Crude was pressurized by an unexpected rise in US crude oil stocks, persisting virus risks and the prospect of higher supply from OPEC. However, supporting price is improved risk sentiment and prospect of a slowdown in shale activity in the US. Crude may remain choppy but general bias may be on the downside amid virus risks and unexpected rise in US crude oil stocks”, said Ravindra Rao, CMT, EPAT-Quantinsti, Head – Commodity Research at Kotak Securities Ltd.
The US Energy Information Administration (EIA) reported that US crude oil inventories rose by 2.1 million barrels per day against the expectation of 4.46 Mbpd drop for the week ended July 16.
Prathamesh Mallya, AVP- Research, Non-Agri Commodities and Currencies, Angel Broking Ltd said, “Further pressuring Oil prices was the Delta variant of COVID-19, which is significantly more contagious than earlier ones and is now the dominant strain worldwide. It has been detected in about 100 countries around the world and patchy rollouts of inoculation programs in many countries are undermining the battle against the virus, raising the prospect of more lockdowns that would hit demand for oil products.”
The black gold has been trading higher than 5, 50, 100 and 200 days’ moving averages but lower than the 20-day moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 49.59, which suggests a neutral movement in the prices.
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices are expected to trade sideways to lower for the day with resistance at $72 and support at $68 per barrel. MCX Crude oil August has support at Rs 5,180, resistance at Rs 5,350.