Crude oil futures declined to Rs 2,932 per barrel on October 12 as participants increased their short position as seen by the open interest. Crude oil prices traded lower amid oversupply fears as production resumed in Libya and Norway at a time when demand recovery is stalling.

The number of rigs drilling crude oil in the US rose by 4 to 193 for the week ended October 9, said Baker Hughes in a weekly report.

West Texas Intermediate crude was down 1.63 percent quoting at $39.94 per barrel, while Brent crude, the London-based international benchmark slides 1.45 percent to $42.23 per barrel.

MCX iCOMDEX Crude Oil Index fell 36.26 points, or 1.05 percent, at 3,426.30 at 15:14.

Navneet Damani, VP Commodities Research, Motilal Oswal Financial Services Ltd, said, “Oil ended the week on a strong note, with near double-digit weekly gains of 10 percent, thanks to the supply disruptions propping the market back in the green lane after two weeks in the red.”

Fiscal stimulus headlines were all over the place last week with reports that Treasury Secretary Steven Mnuchin was going to present House Speaker Nancy Pelosi with a $1.8 trillion counteroffer.

“Crude bull investors need to find a bigger price catalyst in the week ahead to keep up the positive momentum as all the supply disruptions are resolved. The best hope for fundamental support arguably lies in output discipline from OPEC+ and it looks like slowing global oil demand outlook this winter would likely prompt OPEC to reverse a planned easing of oil cuts in 2021, with Saudi Arabia offering deeper cuts below its current quota which can exponentially kick out the glut fears,” he said. 

“Prices can hang around $37 level for this week but a trigger remains; if a stimulus bill is passed during the week, markets can break levels of WTI $41 and move to levels of $44,” said Damani.

“NYMEX crude trades modestly lower near $39.90/bbl pressurised by end of labour strike in Norway, weakening of Hurricane Delta post-landfall, third weekly rise in rig count and choppiness in equity market amid continuing political wrangling over stimulus. A slight rebound in the US dollar has also supported the bears in today’s session. Crude oil rallied sharply in the last few days but we may see some correction amid easing supply concerns,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

In the futures market, crude oil for October delivery touched an intraday high of Rs 2,951 and an intraday low of Rs 2,915 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 2,718 and a high of Rs 3,320.

Crude oil delivery for October slipped by Rs 29, or 0.98 percent, to Rs 2,932 per barrel at 15:18 hours IST with a business turnover of 3,499 lots.

Crude oil delivery for November eased Rs 33, or 1.10 percent, to Rs 2,975 per barrel with a business volume of 184 lots.

The value of October and November contracts traded so far is Rs 608.57 crore and Rs 2.20 crore, respectively.

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Sriram Iyer, Senior Research Analyst, Reliance Securities

International oil prices were trading weaker in Monday afternoon trade in Asia as a Norwegian strike reached a conclusion and US production resumed as Hurricane Delta weakened.

Norwegian oil firms struck a wage bargain with labour union officials last week, ending a 10-day strike that had threatened to cut the country’s oil and gas output by close to 25 percent.

In the Gulf of Mexico, Hurricane Delta was downgraded to a post-tropical cyclone by the weekend and workers were back at production platforms to restart 225,500 barrels worth of production at Port Arthur Texas facility. 

Additionally, weak demand due to rising COVID-19 cases could also weigh on prices.

Technically, NYMEX WTI Crude Oil is trading on a negative note where below $40 levels could see further downside with resistance at $41.60-$42.12 levels and support at $39.90-38.00 levels.

Domestic oil prices are also trading with modest losses this Monday afternoon trade, tracking weak overseas prices.

Technically, MCX Crude Oil October is trading below Rs 2,990 which could see a bearish trend to continue up to Rs 2,900-2,802 levels. Resistance is at Rs 2,960-2,990 levels.

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices declined on Monday paring some gains made in the previous week as producers returned to resume oil output in the Gulf of Mexico after hurricane Delta passed by. Crude oil prices also traded under pressure on expectation of rise in oil supply from Libya.  

We expect crude oil prices to trade sideways to down with support at $38 and resistance at $41. MCX Crude oil October has support at Rs 2,830 and resistance at Rs 2,990.