Crude oil prices ended almost flat last week. Brent crude oil futures on the Intercontinental Exchange (ICE) was down 0.2 per cent by closing at $82.7 per barrel. Crude oil futures on the MCX posted a marginal gain of 0.1 per cent by ending the week at ₹6,551 a barrel.
Brent Crude futures ($82.7)
Brent Crude futures is trading within a range of $81-84. This is the price band within which it was oscillating between mid-February and mid-March. So, the next leg of trend will depend on the direction of the breach of this range.
A breakout of $84 can lift the contract back to $90. If this is breached, the contract can extend the upswing to $96. On the other hand, if Brent crude futures slip below the support at $81, it might decline to $77, a support. Note that $76-77 is a support band.
MCX-Crude oil (₹6,551)
Crude oil futures (May expiry) made an intraweek low of ₹6,434 in the middle of last week before a recovery. But on a weekly basis, it almost closed on a flat note.
The contract remains above the important support at ₹6,400 and as long as it remains so, the probability of a rally will be high. From the current level, the nearest resistance levels are at ₹6,800 and ₹7,000. Subsequent resistance is at ₹7,250.
But if crude oil futures break below the support at ₹6,400, the outlook can turn bearish. In such an event, the contract can depreciate to ₹6,000 and then possibly to ₹5,850.
Trade strategy: We suggested buying May crude oil futures at an average price of ₹6,775. Hold this trade with a stop-loss at ₹6,300.
When the contract recovers and moves past ₹6,800, alter the stop-loss to ₹6,500. On a rally above ₹7,000, modify the stop-loss to ₹6,500. Book profits at ₹7,250.
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.