Crude oil retains the upward bias in trend. Nevertheless, the Brent crude oil futures on the Intercontinental Exchange (ICE) ended last week almost flat at $86.5 per barrel. But the crude oil futures on the MCX was up 2.5 per cent as it closed the week at ₹6,977 a barrel.
Brent futures ($86.5)
Brent Crude futures, despite a sell-off on Friday, remained above the crucial support at $84. Thus, it maintains the bullish bias, keeping the chances high for a rally. However, before the next upswing, there could be a minor correction in price, probably to $84-85 price band.
An up-move, either from the current market price or after a dip to the above-mentioned price band, can lift Brent futures to $92, its nearest notable barrier. Subsequent resistance is at $98. But if the contract declines below $84, it can extend the downward move to $81, a good base.
MCX-Crude oil (₹6,977)
Crude oil futures (July expiry) ended last week with a gain, mainly due to the rally on Monday. For the rest of the week, the contract was largely trading within ₹6,900 and ₹7,040. But as it stands, the uptrend is valid and the price can touch ₹7,250.
But before that, the contract might see a dip in price, possibly to the region of ₹6,750-6,800. In case the fall extends beyond ₹6,750, the crude oil futures might decline to ₹6,500. A breach of ₹6,500 can turn the near-term outlook bearish.
Trade strategy: We recommended long at ₹6,750 two weeks ago. Exit this trade at session open on Monday.
For fresh trade, wait for the price to soften to ₹6,800 and then go long with a stop-loss at ₹6,600. When the contract rises above ₹7,050 post initiating this position, tighten the stop-loss to ₹6,900. Book profits at ₹7,250.