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Commodity Summary
MCX
WTI crude oil witnessed mixed trade but ended with a decline of almost 3 per cent last week. Crude has been juggling between tightness in markets and demand concerns amid a spike in coronavirus cases triggering lockdowns. Despite the losses, WTI crude largely held the $58-62/bbl range amid mixed factors.
Weighing on crude prices were rising Covid-19 cases, which forced countries to impose stricter restrictions, mixed economic data from major economies, the decision by OPEC countries and their allies to raise supply gradually in the coming months, the prospect of higher supply from Iran amid efforts to ease US-Iran tensions, and a rise in US crude oil rig count to April 2020 highs.
However, supporting the price was a second weekly decline in US crude oil stocks, US Energy Information Administration (EIA)’s forecast of a deeper deficit in 2021 owing to demand growth, the IMF’s upbeat global growth outlook, general optimism about the US economy amid stimulus measures, and weakness in the US dollar.
According to the CFTC Commitments of Traders report for the week ended April 6, net long positions for crude oil futures plunged by 19,585 to 5,11,725 contracts. Speculative long positions fell by 21,921 contracts, while shorts dropped by 2,336 contracts. More supplies in the coming months have pulled the prices lower.
Crude oil may continue to trade within its recent range amid mixed cues, however, general bias may be on the downside owing to rising coronavirus cases and OPEC’s decision to gradually increase supply in the coming months. Focus may continue to be on the Covid-19 situation as well as economic data from major economies, which will help form demand outlook.
Also in focus this week will be OPEC and IEA’s monthly outlooks, which will help form outlook for the demand-supply balance, after the recent decision by OPEC and the IMF's upbeat growth outlook.
On the technical front, the WTI crude has witnessed a breakdown from the rising channel, however, for the past few weeks, it has been consolidating between $57.40 and $62.4/bbl. On the MCX, the same pattern can be seen for the active first-month contract as the price is oscillating in a range of Rs 4,550-4,200.
Strength index RSI is struggling to move and sustain above 50, supporting the bear case. As the bias is lower, a break below the lower band of $57.40/bbl would intensify the fall till the $55-$54/bbl levels.
Similarly, on the MCX, a break of the lower bound near Rs 4,200-4,180 would give bears an edge to pull it lower till Rs 4,080-4,000. Till then, the price is expected to continue trading in the range of Rs 4,200-4,560 with a sideways-to-negative bias.
(Ravindra Rao is VP-Head Commodity Research, Kotak Securities. Views are his own)
Weighing on crude prices were rising Covid-19 cases, which forced countries to impose stricter restrictions, mixed economic data from major economies, the decision by OPEC countries and their allies to raise supply gradually in the coming months, the prospect of higher supply from Iran amid efforts to ease US-Iran tensions, and a rise in US crude oil rig count to April 2020 highs.
However, supporting the price was a second weekly decline in US crude oil stocks, US Energy Information Administration (EIA)’s forecast of a deeper deficit in 2021 owing to demand growth, the IMF’s upbeat global growth outlook, general optimism about the US economy amid stimulus measures, and weakness in the US dollar.
According to the CFTC Commitments of Traders report for the week ended April 6, net long positions for crude oil futures plunged by 19,585 to 5,11,725 contracts. Speculative long positions fell by 21,921 contracts, while shorts dropped by 2,336 contracts. More supplies in the coming months have pulled the prices lower.
Crude oil may continue to trade within its recent range amid mixed cues, however, general bias may be on the downside owing to rising coronavirus cases and OPEC’s decision to gradually increase supply in the coming months. Focus may continue to be on the Covid-19 situation as well as economic data from major economies, which will help form demand outlook.
Also in focus this week will be OPEC and IEA’s monthly outlooks, which will help form outlook for the demand-supply balance, after the recent decision by OPEC and the IMF's upbeat growth outlook.
On the technical front, the WTI crude has witnessed a breakdown from the rising channel, however, for the past few weeks, it has been consolidating between $57.40 and $62.4/bbl. On the MCX, the same pattern can be seen for the active first-month contract as the price is oscillating in a range of Rs 4,550-4,200.
Strength index RSI is struggling to move and sustain above 50, supporting the bear case. As the bias is lower, a break below the lower band of $57.40/bbl would intensify the fall till the $55-$54/bbl levels.
Similarly, on the MCX, a break of the lower bound near Rs 4,200-4,180 would give bears an edge to pull it lower till Rs 4,080-4,000. Till then, the price is expected to continue trading in the range of Rs 4,200-4,560 with a sideways-to-negative bias.
(Ravindra Rao is VP-Head Commodity Research, Kotak Securities. Views are his own)
(Disclaimer: The opinions expressed in this column are that of the writer. The facts and opinions expressed here do not reflect the views of www.economictimes.com.)
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