Crude oil futures touch fresh low of Rs 2,540 for November series, WTI trades below $35 a barrel

Crude oil futures edged lower to Rs 2,597 per barrel on November 2 as participants increased their short position as seen by the open interest. Crude oil price touched five months low as countries imposed lockdown measures to curb the rising coronavirus cases and volatility during the US presidential election week.

The number of rigs drilling crude oil in the US rose by 10 to 221 for the week ended October 30, said Baker Hughes in a weekly report.

Market players are pricing in Vice President Joe Biden’s victory which will bring Iranian crude of 1 million barrels per day back in the market as he can remove all sanctions imposed on Iran and bring oversupply situation back in the market.

Crude oil prices were further pressured down by increasing output from Libya. The country’s oil production has touched 800,000 barrels per day and is targeting 1.3 million barrels from the beginning of 2021 offsetting production cut by OPEC+ member in a well-supplied global market.

West Texas Intermediate crude was down 2.54 percent quoting at $34.88 per barrel, while Brent crude, the London-based international benchmark eased 2.06 percent to $37.11 per barrel.

MCX iCOMDEX Crude Oil Index declined 59.09 points, or 1.93 percent, at 3,002.38 at 16:12.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities said, “Crude oil prices traded under pressure on weaker demand concerns over a surge in virus cases with lockdown measures in Europe and oversupply scenario. The lockdowns fear in the US over record cases has also kept prices lower in loss of fuel demand.”

“NYMEX crude trades lower near $34.8/bbl pressurized by a fourth monthly rise in OPEC production, tightening virus-related restrictions in Europe, rise in US crude oil rig count to May highs and uncertainty relating to US elections. Crude may remain under pressure unless there are fresh positive triggers in form of outcome from US elections or intervention by OPEC or some improvement in the virus situation”, said Ravindra Rao, VP-Head Commodity Research at Kotak Securities.

In the futures market, crude oil for November delivery touched an intraday high of Rs 2,618 and an intraday low of Rs 2,540 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 2,540 and a high of Rs 3,127.

Crude oil delivery for November slipped Rs 48, or 1.82 percent, to Rs 2,594 per barrel at 16:15 hours IST with a business turnover of 3,934 lots.

Crude oil delivery for December decreased Rs 52, or 1.93 percent, to Rs 2,644 per barrel with a business volume of 156 lots.

The value of November and December’s contracts traded so far is Rs 1,328.16 crore and Rs 4.35 crore, respectively.

Patel expects crude oil prices to trade down with support at $32 and resistance at $38. MCX Crude oil November has support at Rs 2,470, resistance at Rs 2,620.