Crude oil futures down 1.8% to Rs 2,939, WTI trades above $40 a barrel

Crude oil futures decreased to Rs 2,939 per barrel on September 21 as participants increased their short positions. Prices fell tracking the global sell-off in equities on fears of fresh curbs being imposed to stem rising novel coronavirus, or COVID-19, cases.

Barclays Commodities Research raised its oil price forecasts for 2020, citing limited potential downside to its demand outlook. The bank raised its 2020 Brent and US West Texas Intermediate (WTI) price forecasts by $2 to $43 and $39 per barrel, respectively.

Tapan Patel, Senior Analyst (Commodities), HDFC Securities, said, “Crude oil prices declined on lifting up of the oil blockade in Libya, which has retuned Libyan output back to the market. Workers at Libya's major Sharara field have restarted operations after National Oil Corporation announced a partial lifting of force majeure.”

“Increased storm activity, decline in US crude oil rig count and OPEC’s willingness to take additional measures might put a floor to prices. The strength in US Dollar Index might trigger some more correction ahead of contract expiration”, said Ravindra Rao, VP-Head Commodity Research, Kotak Securities

In the futures market, crude oil for September delivery touched an intraday high of Rs 3,029 and a low of Rs 2,931 per barrel on the Multi-Commodity Exchange (MCX). So far in the current series, black gold has touched a low of Rs 2,672 and a high of Rs 3,285.

Crude oil futures for September delivery slipped Rs 54, or 1.8 percent, to Rs 2,939 per barrel at 15:50 hours IST on a business turnover of 2,221 lots.

The same for October delivery declined Rs 47, or 1.56 percent, to Rs 2,947 per barrel on a business volume of 1,187 lots.

The value of September and October contracts traded so far is Rs 681.73 crore and Rs 11.87 crore, respectively.

Patel expects oil prices to trade sideways to down for the day, with support and resistance for MCX September Crude Oil futures at Rs 2,890 and Rs 3,040 per barrel.

West Texas Intermediate crude was down 2.47 percent at $40.30 per barrel, while Brent crude, the London-based international benchmark, slipped 2.22 percent to $42.19 per barrel.