Crude oil prices dropped last week – Brent crude oil futures on the Intercontinental Exchange (ICE) was down 2.3 per cent by closing at $82.1 per barrel, whereas crude oil futures on the MCX posted a loss of 2.4 per cent by ending the week at ₹6,471 a barrel.

Brent Crude futures ($82.1)

Brent Crude futures faced selling pressure through last week. While it marked a low of $80.7 on Friday, it managed to close above a crucial support at $81. Hence, the range of $81-84 remains valid.

Going ahead, if the contract recovers and breaks out of $84, it can bring back the bullish momentum, where the price can rise to $87, a minor resistance. Above this, $90 and $96 can act as barriers.

But if the contract decisively breaks below $81, it can quickly drop to $79. Immediate support below $79 is at $76.

MCX-Crude oil (₹6,471)

Crude oil futures (June expiry) fell last week. It dropped below the support at ₹6,400 and marked a low of ₹6,345 on Friday. However, after trading below ₹6,400 briefly, the contract reclaimed this level and closed at ₹6,471.

If crude oil futures rally from here, it will face a resistance at ₹6,650. A breakout of ₹6,650 can lift the contract to ₹7,000, a barrier. Subsequent resistance is at ₹7,250.

In case the contract faces selling pressure and decisively breaches the base at ₹6,400, it can quickly depreciate to ₹6,000, a support. A break below this level can turn the medium-term trend bearish.

Yet, there is a possibility for crude oil futures to remain within the ₹6,400-6,650 range for some time.

Trade strategy: The next leg of trend depends on the direction of the break of the above-mentioned range. Go long with stop-loss at ₹6,480 if the contract breaks out of ₹6,650. Book profits at ₹7,000.

But if the contract breaks ₹6,400, initiate short with a stop-loss at ₹6,600. Exit at ₹6,000.

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