Crude oil prices declined on concerns of rising Delta variant cases of coronavirus globally and surprise build up in US stockpiles. However, the oil prices were supported by increase geopolitical tension in the Middle East.
The energy commodity traded in the red after a flat to positive start, tracking muted global trend.
On the MCX, crude oil delivery for August slides Rs 20, or 0.39 percent, to Rs 5,062 per barrel at 16:29 hours IST with a business turnover of 7,324 lots. The delivery for September fell Rs 33, or 0.65 percent to Rs 5,047 per barrel with a business volume of 778 lots.
The value of August and September’s contracts traded so far is Rs 1,006.10 crore and Rs 29.80 crore, respectively.
West Texas Intermediate (WTI) crude was marginally down 0.01 percent to $68.14 per barrel, while Brent crude, the London-based international benchmark, slipped 0.14 percent to $70.28 per barrel.
For the September crude options, the most active Call and Put strikes near the ATM’s are 69.50, 70, 70.50 and 71.50. The most active put strikes near the ATM’s are 68 and 69.50.
Prathamesh Mallya, AVP Research – Non-Agri Commodities and Currencies, Angel Broking Ltd said, “Oil prices continued to trade lower extending the fall from the earlier sessions as increasing US Crude inventories amid rising cases of the Delta variant of the Covid19 virus clouded the outlook for the global Oil market.”
“Crude Oil remained under pressure as worries over slow growth in China’s industrial sector amid OPEC increasing their Oil output which ignited over supply worries in the global markets and dragged the prices lower,” he added.
The US Energy Information Administration (EIA) reported that US crude oil inventories rose by 3.6 million barrels per day against the expectation of 3.2 Mbpd drops for the week ended July 30. Gasoline stocks fell by 5.3 million barrels, the Department of Energy said, higher than expectations for a 1.8 million decline.
Technicals
The black gold has been trading higher than 100 and 200 days’ moving averages but lower than the 5, 20 and 50 day’s moving averages on the daily chart. The momentum indicator Relative Strength Index (RSI) is at 40.43, which indicates bearishness in the prices.
Trading Strategy
Tapan Patel- Senior Analyst (Commodities), HDFC Securities
Crude oil prices traded lower on weaker demand with rising virus cases and disappointed US data which resulted in a dollar rally. Crude oil prices traded weak after US API report showed inventory build of 3.6 mb in last week. Crude oil prices may keep downside limited on Middle East tensions on Iran and Israel spat on tanker hijack blame game.
Crude oil prices are expected to trade sideways to down for the day with resistance at $70 and support at $67 per barrel. MCX Crude oil August has support at Rs 4,970, resistance at Rs 5,120.
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