Crude oil futures firm at Rs 3,555, Brent trades above $51 a barrel

Crude oil futures rose to Rs 3,555 per barrel on December 18 as participants increased their long position as seen by the open interest. Crude oil price traded higher on hopes of a $900 billion stimulus package in the US, rally in equity markets and general weakness in the dollar index.

The recent fall in inventories and optimism surrounding the vaccine rollout along with possible approval for Moderna vaccine also lifted prices.

Physical markets appear robust as Indian refineries run at full throttle and Asian demand drives the price of Russian, Middle Eastern and US barrels higher.

“NYMEX crude trades little changed near $48.3/bbl after ending on a higher note yesterday. Crude remains supported by bigger than expected decline in US inventory along with vaccine progress, weaker US dollar and stimulus expectations. However, weighing on price is rising virus cases, mixed economic data and downbeat demand forecasts. Crude might soon attract some resistance as it is close to the psychological level of $50/bbl, as the demand concerns amid rising virus cases might weigh on prices,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

West Texas Intermediate crude was marginally down 0.10 percent quoting at $48.31 per barrel, while Brent crude, the London-based international benchmark fell 0.23 percent to $51.38 per barrel.

MCX iCOMDEX Crude Oil Index inched up 10.26 points, or 0.25 percent, at 4,079.99 at 15:48.

In the futures market, crude oil for December delivery touched an intraday high of Rs 3,566 and an intraday low of Rs 3,529 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 2,594 and a high of Rs 3,572.

Crude oil delivery for December gained Rs 8, or 0.23 percent, to Rs 3,555 per barrel at 15:49 hours IST with a business turnover of 633 lots.

Crude oil delivery for January soared Rs 11, or 0.31 percent, to Rs 3,580 per barrel with a business volume of 804 lots.

The value of December and January’s contracts traded so far is Rs 128.39 crore and Rs 64.74 crore, respectively.

Trading strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices traded under pressure on worries over rising virus cases and delaying relief package from the US. Crude oil prices have touched the resistance range of $48-$50 on risk on sentiments over vaccine rollouts and stimulus hopes.

We expect crude oil prices to trade sideways to up with support at $47 and resistance at $49. MCX Crude oil January has support at Rs 3,510, resistance at Rs 3,620.

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