Crude oil futures up nearly 2% at Rs 2,813 per barrel as risk appetite grows

Crude oil futures jumped to Rs 2,813 per barrel on November 9 as participants increased their long position as seen by the open interest. Crude oil price gained amid improved risk appetite after Joe Biden clinched the US presidency.

The number of rigs drilling crude oil in the US rose by 5 to 226 for the week ended November 6, said Baker Hughes in a weekly report.

"Oil ended the week on a negative note but is witnessing a rebound at the start of this week, as risky assets got a boost on expectations of fewer regulatory changes and more monetary stimulus under US president-elect Joe Biden. Markets cheered the fact that what appears to be a divided government at this point provides more continuity of the current environment rather than the potential for wide-sweeping changes and this scenario puts the odds of higher taxes very low in the years to come”, said Navneet Damani, VP Commodities Research, Motilal Oswal Financial Services. 

West Texas Intermediate crude was up 2.07 percent quoting at $37.91 per barrel, while Brent crude, the London-based international benchmark edged higher 2.08 percent to $40.27 per barrel.

MCX iCOMDEX Crude Oil Index soared 54.46 points, or 1.70 percent, at 3,259.62 at 15:51.

“NYMEX crude has risen over 2 percent to trade near $38 per barrel due to risk on, weaker US dollar and hopes that OPEC may defer further production hike. However, weighing on price is the decline in Chinese crude imports last month, rise in US crude rig count to May highs and surge in Libyan output. Mixed factors may keep crude choppy however general bias may be on the upside with expectations of additional measures by OPEC and weak US dollar”, 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 2,829 and an intraday low of Rs 2,796 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 rose Rs 47, or 1.70 percent, to Rs 2,813 per barrel at 15:54 hours IST with a business turnover of 3,502 lots.

Crude oil delivery for December climbed Rs 44, or 1.57 percent, to Rs 2,852 per barrel with a business volume of 125 lots.

The value of November and December’s contracts traded so far is Rs 829.85 crore and Rs 3.02 crore, respectively.

Trading strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

We expect crude oil prices to trade up with support at $36 and resistance at $40. MCX Crude oil November has support at Rs 2,750, resistance at Rs 2,890.

Sriram Iyer, Senior Research Analyst at Reliance Securities

Technically, WTI Crude Oil is trading on a positive note where it bounced back from $37.50 levels. Prices further could see some upside hurdle near $39.70-$40.40 levels. Oil could trade in a range of $37.10-$40.10 in the coming session.

Technically, MCX Crude November is holding above 200-Daily Moving Average and trading above Rs 2,750 could see a further sideways movement. Resistance is at Rs 2,850-2,910 levels whereas support is at Rs 2,762-2,710 levels.