Crude oil futures jumped to Rs 4,467 per barrel on March 2 as participants increased their long positions as seen by the open interest. Crude oil had declined on fear of lower Chinese consumption and an increase in OPEC output following a meeting this week.
Crude oil erased earlier losses to trade in positive territory in the afternoon after a gap-down open.
The oil price has been rallying in the last few weeks and the continuous rise made it susceptible to profit booking.
The black gold has been trading higher than 20, 50, 100 and 200 days' moving averages but lower than the five-day moving average on the daily chart. The Relative Strength Index (RSI) is at 63.30 which indicates bullish momentum in prices.
With an improving demand forecast and higher price, OPEC+ and allies are likely to discuss further normalisation of production cuts which remain in place since last year.
“NYMEX crude trades about 1.4 percent lower near $59.8/bbl. Crude trades weaker weighed down by gains in the US dollar, disappointing Chinese economic data and expectations that OPEC+ may increase output at this week’s meeting. However, supporting price is optimism about the US economy and a decline in OPEC output in February. Crude may remain under pressure ahead of OPEC meeting; however, a sharp slide is unlikely as the producer group may not disrupt market balance.”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.
West Texas Intermediate crude was slightly up 0.05 percent to $60.67 per barrel, while Brent crude, the London-based international benchmark fell 0.03 percent to $63.67 per barrel.
MCX iCOMDEX Crude Oil Index increased 24.89 points, or 0.49 percent, at 5,060.85 at 15:40 IST.
In the futures market, crude oil for March delivery touched an intraday high of Rs 4,467 and an intraday low of Rs 4,393 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 3,800 and a high of Rs 4,674.
Crude oil delivery for March gained Rs 16, or 0.36 percent, to Rs 4,467 per barrel at 15:41 hours IST with a business turnover of 4,642 lots.
Crude oil delivery for April edged higher Rs 17, or 0.38 percent to Rs 4,481 per barrel with a business volume of 207 lots.
The value of March and April’s contracts traded so far is Rs 930.51 crore and Rs 5.41 crore, respectively.
Trading strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices pared previous gains amid broad selling in commodities and fear that OPEC plus nations may ease output cut quota when they meet this week. The weaker Chinese data and dollar rally has put additional selling pressure on crude oil prices.
We expect crude oil prices to trade sideways to down with support at $59 and resistance at $61.50. MCX Crude oil March has support at Rs 4,360, resistance at Rs 4,470.
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