Crude oil futures slip 0.82%, Axis Securities suggests buying on dips

Crude oil futures dipped 0.82 percent to Rs 3,632 per barrel on February 13 as participants increased their short position as seen by the open interest.

Oil prices took a breather after they jumped over 3 percent in yesterday session as the number of people infected with coronavirus climbed close to 50,000, and the death toll from the virus rose to over 1,300 people.

The US Energy Information Agency reported that US crude inventories rose to 7.46 million barrels as against a rise of 3.2 million barrels that was forecasted by analysts.

Sunilkumar Katke, Head of Commodities and Currency at Axis Securities pointed out that while the death toll from coronavirus has breached 1,000, the ratio of infected people to fatality is in the range of 3-4 percent, which is not alarming. China's success in curbing the spread of the disease had led to a positive trigger in crude oil, he said.

As long as Brent crude sustains above $55, it is a positive trend, he said. Clients can deploy buy on dips strategy as Brent could then go towards the $60 mark, with non-OPEC countries also likely to decide on a production cut, he added.

In the futures market, crude oil touched an intraday high of Rs 3,676 and an intraday low of Rs 3,625 per barrel on the MCX. For the February series, crude touched a low of Rs 3,531 and a high of Rs 4,663.

On the Multi Commodity Exchange, crude oil delivery for February contracts slipped Rs 29, or 1.26 percent, to Rs 3,625 per barrel with a business turnover of 34,134 lots.

The price of crude contracts for delivery in March eased Rs 43, or 1.16 to Rs 3,648 per barrel with a business volume of 4,767 lots.

The value of the February contract traded so far is Rs 4,435.09 crore, and the contracts for March saw a value of Rs 47.65 crore.

MCX crude oil has immediate support at Rs 3,620-3,580, whereas resistance is at Rs 3,710-3,740, according to Motilal Oswal.

West Texas Intermediate crude slipped 0.92 percent to $50.70 per barrel, while Brent crude, the international benchmark was down 1.27 percent to $55.08 per barrel.