Crude oil futures jumped to Rs 4,027 per barrel on February 3 as participants increased their long positions as seen by the open interest. Crude oil price gained after a sharp decline in US crude stockpile, increased fuel demand and US lawmakers looked to adopt an economic stimulus package.
The American Petroleum Insitute (API) reported that US crude inventories dropped 4.26 million barrels to 477.6 million barrels for the week ended January 29.
Crude oil was supported by severe cold weather in US Northeast boosting demand for heating fuels.
“NYMEX crude trades marginally higher near $55/bbl supported by API weekly report which noted an unexpected 4.261 million barrels decline in US crude oil stocks. Also, hopes of the tighter global market due to Saudi’s production cuts and expectations of additional US stimulus supported the price. Disappointing Chinese services PMI data has; however, limited the gains. Crude oil may remain sideways to higher ahead of the inventory report today”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
West Texas Intermediate crude was up 0.58 percent to $55.08 per barrel, while Brent crude, the London-based international benchmark gained 0.21 percent to $57.92 per barrel.
MCX iCOMDEX Crude Oil Index inched higher 23.87 points, or 0.52 percent, at 4,574.82 at 16:46.
In the futures market, crude oil for February delivery touched an intraday high of Rs 4,040 and an intraday low of Rs 4,010 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 3,486 and a high of Rs 4,042.
Crude oil delivery for February rose Rs 22, or 0.55 percent, to Rs 4,027 per barrel at 16:47 hours IST with a business turnover of 6,809 lots.
Crude oil delivery for March soared Rs 22, or 0.55 percent to Rs 4,039 per barrel with a business volume of 126 lots.
The value of February and March’s contracts traded so far is Rs 1,206.85 crore and Rs 4.24 crore, respectively.
Trading strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices are trading higher on supply deficit concerns despite slow demand recovery on producers' pledge to cut oil output. Crude oil prices gained after API report showed a decline in US weekly oil inventories by 4.26 mb ahead of official data from EIA.
We expect crude oil prices to trade sideways to up with support at $54 and resistance at $56. MCX Crude oil February has support at Rs 3,960, resistance at Rs 4,080.
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