Brent Crude oil price rising above $90 per barrel last week has brought the energy commodity back into the limelight. Oil price has surged about 25 per cent from around $72 per barrel in June to the current level of around $90 per barrel.

Russia and Saudi Arabia, the top producers of oil, announcing to extend its production cuts took the price above $90 last week. Saudi Arabia will continue to cut production by one million barrels per day until the end of December this year. Russia will continue to cut its exports by 300,000 barrels per day until this year-end.

Brent Crude outlook

Brent Crude ($90.50) has been in a strong downtrend since June last year. This downtrend found support around $70 in March this year and has been sustaining well above it. Although the level of $89 was capping the upside, the prices continued to get support around $70 every time it fell since March this year.

The recent breakout above $89 has turned the outlook bullish. Strong support will now be around $88. A fall below $88 looks less likely at the moment. Brent Crude Oil price can rise to $95-96 in the short term. The 38.2 per cent Fibonacci retracement resistance is around $96.50. The recent rise can halt around $96 in the coming weeks. A corrective fall from there can take the Brent Crude price down to $90-88 again. However, as mentioned above a fall below $88 is less likely.

As such, a fresh leg of rise again from around $90-88 will have the potential to take the price above $96.50 eventually. That rise will see the Brent Crude Oil price touching $100 initially and then $105-107 eventually in the coming months.

This outlook will go wrong only if the price declines below $88. In that case, Brent Crude can fall back to $78-75 and even lower.

MCX-Crude outlook

The Crude Oil futures contract on the Multi Commodity Exchange has surged 12 per cent over the couple of weeks. This rise has taken the contract well above the psychological level of ₹7,000 per barrel. The price is currently at ₹7,258 per barrel.

The outlook is bullish. Strong support is in the ₹7,000-6,900 region. Immediate resistance is around ₹7,350. The chances are high for the contract to break this resistance. Such a break can take the MCX Crude Oil price up to ₹7,650-7,700 initially. A further break above ₹7,700 will then open the doors for the target to reach ₹8,000-8,200.

The outlook will turn negative only if the contract declines below ₹6,900. In that case, a fall to ₹6,400-6,200 can be seen.

Hold the longs

Last week, we had recommended to buy the MCX Crude Oil contract around ₹7,064. Hold the long positions with a revised strategy as follows. Revise the stop-loss up from ₹6,720 to ₹6,830. Trail the stop-loss up to ₹7,250 when the contract moves up to ₹7,400. Exit at ₹7,580.

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