Crude oil futures slip nearly 2%, WTI trades below $40 a barrel

Crude oil futures dropped to Rs 2,991 per barrel on July 14 as participants increased their short positions on concerns over rising coronavirus cases in the US and other parts of the world as well as OPEC+ pre-announced plan to bring back additional 2 million barrels per day of oil supply from August.

Participants will take a further cue from the weekly inventory data released by the American Petroleum Institute later in the day.

“Crude oil prices ended down for the week after some buying before the weekend, after a bullish monthly report by IEA along with data from Baker Hughes showing that US energy firms cut the number of oil and natural gas rigs operating to a record low for a 10th week in a row”, said Navneet Damani, VP Commodities Research, Motilal Oswal Financial Services.

While the oil market has undoubtedly made progress since 'Black April', the large, and in some countries, an accelerating number of COVID-19 cases is a disturbing reminder that the pandemic is not under control and risk to their market outlook is almost certainly to the downside to levels of WTI $35, Damani said.

Tapan Patel, Senior Analyst (Commodities), HDFC Securities said, crude oil prices traded lower on speculation over expectations of ease in output cut from OPEC.

The OPEC’s joint technical committee will meet for two days starting from July 14 to review the oil market situation.

In the futures market, crude oil for July delivery touched an intraday high of Rs 2,995 and an intraday low of Rs 2,944 per barrel on the Multi-Commodity Exchange (MCX). So far in the current series, black gold has touched a low of Rs 1,655 and a high of Rs 3,153.

Crude oil futures for July delivery slipped Rs 60, or 1.96 percent, to Rs 2,995 per barrel at 15:03 hours IST on a business turnover of 5,855 lots.

The same for August delivery edged lower by Rs 62, or 2.01 percent, to Rs 3,021 per barrel on a business volume of 163 lots.

The value of July and August's contracts traded so far is Rs 1,160.26 crore and Rs 7.79 crore, respectively.

Patel expects oil prices to trade sideways to down for the day with support at $38 and resistance at $41. "MCX July Crude Oil futures has support at Rs 2,920 and resistance at Rs 3,040."

West Texas Intermediate crude slipped 0.85 percent at $39.76 per barrel, while Brent crude, the London-based international benchmark, was down 0.66 percent to $42.44 per barrel.