Crude oil prices moderated over the past week. The Brent crude oil futures on the Intercontinental Exchange (ICE) lost 1.6 per cent and ended the week at $85.1 per barrel. Similarly, the crude oil futures on the MCX was down 1.9 per cent, as it closed the week at ₹6,797 a barrel.

Brent futures ($85.1)

Brent Crude futures marked an intraweek low of $84 mid-week; but it recovered to close the week at $85.1. Therefore, the support band of $84-85 remains valid and can help the contract rebound.

There is a good chance for Brent futures to resume the uptrend and move towards $92. A breakout of this level can take the contract to $98. But if the support at $84 is breached, the short-term outlook can turn bearish. In such a case, it can extend the downward move to $81, a good support.

MCX-Crude oil (₹6,797)

In line with our expectations, the price of crude oil futures softened last week. However, the key support levels stay true, which are likely to prevent further fall from here. We shall consider the August contract for analysis as the July contract is nearing expiry.

The August crude oil futures has a strong support at ₹6,680. We expect the contract to rebound on the back of this and rally to ₹7,250. However, if it breaks below the support at ₹6,680, it can turn the outlook bearish and extend the decline to ₹6,500, a potential support.

Trade strategy: We recommended buying July futures if the price dips to ₹6,800. Roll-over the longs to August contract. That is, exit longs in July contract at the current level of ₹6,890 and buy August futures at ₹6,800. Place stop-loss at ₹6,620. When the contract rises above ₹7,000, tighten the stop-loss to ₹6,880. Book profits at ₹7,250.

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