The black gold has been trading higher than 5, 20, 50, 100 and 200 days’ simple moving averages and exponential moving averages on the daily chart.
Crude oil prices traded in marginally positive territory on sharp drawdown in US inventories and the prospects of a rebound in global economic recovery. The oil prices were supported by weakness in the dollar index and a recovery in the equity indices.
The energy commodity pared gains in the evening session after a flat-to- gap-up start, on a positive global trend.
On the MCX, crude oil delivery for August marginally gained Rs 1, or 0.02 percent, to Rs 5,404 per barrel at 16:15 hours IST with a business turnover of 5,923 lots. The delivery for September rose Rs 1, or 0.02 percent to Rs 5,370 per barrel with a business volume of 239 lots.
The value of August and September’s contracts traded so far is Rs 535.46 crore and Rs 7.39 crore, respectively.
West Texas Intermediate (WTI) crude jumped 0.26 percent to $72.58 per barrel, while Brent crude, the London-based international benchmark, inched higher 0.24 percent to $74.05 per barrel.
“We are expecting global crude prices to witness bullish trend with fall in US inventories and American stockpiles. The demand in the United States continues to rise with higher industrial buying and domestic usage of gasoline fuel. The expectancy of higher US GDP growth rate in the second quarter of 2021 is forecasted to lift up prices in the coming week”, said Sunand Subramaniam, Senior Research Associate, Choice Broking.
“However, experts are widely expecting that fuel demand will likely not recover to its pre-COVID-19 level until 2022, especially in case of the number of COVID-19 cases continue to increase and the vaccination rate continues to slow down”, Subramaniam added.
The US Energy Information Administration (EIA) reported that US crude oil inventories declined by 4.1 million barrels per day against an expectation of 2.92 Mbpd drops for the week ended July 23. Gasoline stocks also fell bringing them largely in line with pre-pandemic levels.
The oil price has been stuck in a range for the last few sessions as investors await more clarity. The expectations of a tighter global market are countered by demand concerns.
Technicals
The black gold has been trading higher than 5, 20, 50, 100 and 200 days’ simple moving averages and exponential moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 53.18, which indicates a neutral movement in the prices.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices traded higher on bullish weekly inventory data. The EIA report showed a draw of 4.089 million barrels in the week to July 23 to their lowest level since January 2020. Crude oil prices got support from the peak summer season which has resulted in weekly inventory drawdown.
Crude oil prices are expected to trade sideways to higher for the day with resistance at $75 and support at $72 per barrel. MCX Crude oil August has support at Rs 5,360 and resistance at Rs 5,510.
Sriram Iyer, Senior Research Analyst, Reliance Securities
Technically, WTI Crude oil resistances are at $73.30-$73.95 whereas supports are at $71.65-$70.50. On the domestic front, the MCX August Crude Oil contract could trade within the range of Rs 5,290-Rs 5,500.
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