Crude oil futures slipped 1.33 percent to Rs 4,682 per barrel on March 16 on concerns of demand recovery as many European countries suspended the use of the AstraZeneca-Oxford COVID-19 vaccine. The diminishing appetite for US oil by Asian refiners also weighed on sentiment.
The energy commodity traded in the negative after a gap-down start and trade near day’s low.
The black gold has been trading higher than 20, 50, 100 and 200 days' moving averages but lower than the 5-day moving average on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 60.73 indicating positive momentum in prices.
While crude oil has rallied sharply in the last few weeks, speculators have not raised long positions significantly highlighting the lack of conviction. As per the US CFTC report, speculator to NYMEX crude futures raised net long position by 3.5 percent after raising it by 1.4 percent a week ago.
Brent speculators cut the net long position by 1.2 percent last week after cutting it by 0.4 percent a week ago.
The spread between WTI and Brent May contract widened from $3.44/bbl to $3.58/bbl as Brent fell less than WTI crude. Brent was generally supported by expectations of a tighter market with OPEC+ keep supply-constrained, said Kotak Securities.
West Texas Intermediate crude was down 1.39 percent to $64.48 per barrel, while Brent crude, the London-based international benchmark dropped 1.45 percent to $67.88 per barrel.
“NYMEX crude trades lower near $64.7/bbl. Weighing on the crude price is a general weakness in the Chinese equity market, concerns about a possible tax hike in the US and concerns that higher prices may impact consumer demand and boost inflation. Supporting price is optimism about the US economy and expectations of a tighter global market. Crude oil may remain volatile ahead of the US weekly inventory report however concerns about the tighter global market may continue to support,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities
MCX iCOMDEX Crude Oil Index decreased 73.54 points, or 1.37 percent, at 5,295.06 at 15:35.
In the futures market, crude oil for March delivery touched an intraday high of Rs 4,730 and an intraday low of Rs 4,672 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 4,967.
Crude oil delivery for March tumbled Rs 63, or 1.33 percent, to Rs 4,682 per barrel at 15:36 hours IST with a business turnover of 4,477 lots.
Crude oil delivery for April edged lower Rs 61, or 1.28 percent to Rs 4,711 per barrel with a business volume of 658 lots.
The value of March and April’s contracts traded so far is Rs 752.43 crore and Rs 21.99 crore, respectively.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices witnessed a decline on demand recovery concerns after Germany and France haled vaccinations. Germany, France and Italy plan to suspend AstraZeneca (COVID-19 injections after reports of possible serious side effects. The rising inventories also pressured oil prices to trade weak for the day.
Crude oil prices are expected to trade sideways to down for the day with resistance at $67 and support at $63.80 per barrel. MCX Crude oil March has support at Rs 4,630, resistance at Rs 4,760.
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