Crude oil prices made some recovery last week after witnessing selling pressure in the preceding few weeks. Brent crude oil futures on the Intercontinental Exchange (ICE) was up 1.6 per cent by closing at $84 per barrel. Crude oil futures on the MCX posted a gain of 1.4 per cent by ending the week at ₹6,627 a barrel.

Brent Crude futures ($84)

Brent Crude futures remains within the range of $81-84. Technically, unless the contract moves out of this price band, we cannot be certain about the next swing in price.

But the bias seems to be positive and on the back of this, if the contract breaks out of $84, it can rally to $90, a resistance, quickly. Next resistance is at $96.

On the other hand, if bears gain traction and drag the contract below the support at $81, the Brent futures might decline to $77. Note that the price region between $76-77 is a support band.

MCX-Crude oil (₹6,627)

Crude oil futures (June expiry) has found strong support at ₹6,450. The chart indicates buying at these levels as the volume has been healthy as the contract advanced in the second half of last week.

However, there is a resistance at ₹6,670. If this level is breached, the contract can establish a rally to ₹7,250. Note that ₹7,000 can act as a hurdle. Nevertheless, once the contract breaks out of ₹6,670, it can gather enough momentum to surpass ₹7,000.

In case the contract falls from here and slips below ₹6,450, the downswing will most likely extend to ₹6,000 or even to ₹5,850, which are the important support levels.

Trade strategy: A couple of weeks ago, we suggested buying May crude oil futures at an average price of ₹6,775. Since it expires on May 20, we recommend to roll-over the longs. That is, exit the longs in May contract and immediately buy July futures, which is now at ₹6,627.

Stop-loss can be at ₹6,370. When the contract moves above ₹6,670, tighten the stop-loss to ₹6,450. Once the contract touches ₹7,000, raise the stop-loss further to ₹6,750. Book profits at ₹7,250.

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