Crude oil futures rise 2.62%, Brent crude trades above $40 a barrel

Crude oil futures rose to Rs 2,856 per barrel on June 16 as participants unwound their long positions. Prices were up on recovery in the global equity markets and stimulus measures by the US Federal Reserve to boost economic growth.

The black gold was also supported by Iraq’s decision to cut crude exports to Asia by 15-20 percent in order to comply with the production pact with OPEC+.

Oil Minister Dharmendra Pradhan told PTI that India's fuel demand has reached 80-85 percent of pre-COVID-19 levels in the first half of June, but return to the 5 percent growth trajectory may take up to two years. Demand, which had fallen by as much as 70 percent, has since recovered after lockdown restrictions were eased beginning early May.

Tapan Patel, Senior Analyst (Commodities), HDFC Securities, said crude oil prices gained on June 16 on hopes of a demand recovery and reduction in the supply glut. "Investors side-lined the worries over rising virus cases in the US, Beijing and Tokyo over prospects of higher demand. Prices were supported by a rebound in equity indices after the US Fed announced it will expand its bond buying programme to boost liquidity."

In the futures market, crude oil for June delivery touched an intraday high of Rs 2,887 and an intraday low of Rs 2,789 per barrel on the Multi Commodity Exchange (MCX). So far in the current series, black gold has touched a low of Rs 1,361 and a high of Rs 4,415.

Crude oil futures for June delivery gained Rs 73, or 2.62 percent, to Rs 2,858 per barrel at 15:16 hours IST on a business turnover of 4,250 lots.

The same for July delivery jumped Rs 69, or 2.44 percent, to Rs 2,892 per barrel on a business volume of 468 lots.

The value of June and July contracts traded so far is Rs 1,497.22 crore and Rs 23.93 crore, respectively.

Patel expects oil prices to trade sideways to up for the day with support at $35.80 and resistance at $40. "MCX June Crude Oil futures has support at Rs 2,780 and resistance at Rs 2,940."

West Texas Intermediate crude gained 1.27 percent at $37.59 per barrel, while Brent crude, the London-based international benchmark, was up 1.49 percent to $40.31 per barrel.