Crude oil futures were steady at Rs 3,863 per barrel on January 14 as participants increased their long position as seen by the open interest. The crude oil prices had declined 0.6 percent on January 13 on the NYMEX.

The US Energy Information Administration (EIA) reported that US crude inventories fell for the fifth straight week by 3.24 million barrels for the week ended January 8 against market expectation of 2.3 million barrels decline.

Crude oil prices traded under pressure on rising coronavirus cases in Europe and the US and a fresh lockdown in China despite bullish inventory data.

“NYMEX crude trades in a narrow range above $52 per barrel. Mixed inventory report and support from Saudi’s production cut, US stimulus expectations and vaccine progress has been supporting the prices. However, rising virus cases are creating a demand concern limiting the upside. Crude’s rally has come to a halt amid lack of fresh triggers, however, the general outlook remains positive as Saudi’s production cut is expected to keep the market in a deficit,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Tapan Patel- Senior Analyst (Commodities), HDFC securities said: “Crude oil prices pared some previous gained on bullish inventory data from US EIA which reported a fifth consecutive draw in oil inventories. Crude oil prices boosted by positive global cues on stimulus hopes along with buying in equity indices.”

We expect crude oil prices to trade sideways to up with support at $52 and resistance at $54. MCX Crude oil January has support at Rs 3,820, resistance at Rs 3940, Patel noted.

West Texas Intermediate (WTI) crude was flat quoting at $52.91 per barrel, while Brent crude, the London-based international benchmark, was slightly up 0.05 percent to $56.03 per barrel.

MCX iCOMDEX Crude Oil Index inched lower 7.98 points, or 0.18 percent, at 4,406.12 at 16:06.

In the futures market, crude oil for January delivery touched an intraday high of Rs 3,894 and an intraday low of Rs 3,837 per barrel on the MCX. So far in the current series, black gold has touched a low of Rs 3,130 and a high of Rs 3,971.

Crude oil delivery for January eased by Rs 8, or 0.21 percent, to Rs 3,863 per barrel at 16:07 hours IST with a business turnover of 2,218 lots. 

Crude oil delivery for February dropped by Rs 19, or 0.49 percent, to Rs 3,876 per barrel with a business volume of 73 lots.

The value of January and February’s contracts traded so far is Rs 266.68 crore and Rs 2.44 crore, respectively.

Trading strategy

Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited

Technically MCX Crude is trading firm above Rs 3,800, We may expect another round of volatility near this level, Major support in WTI Crude oil are: $48.82-44.99, Major resistance are: $54.57-59.99 Major support in MCX Crude oil are: Rs 3,570 –3,420, Major resistance are Rs 3,900-3,970. Overall, it was a bullish report and with declined inventories and strong demand and if the same scenario continues then Crude have good chances to move higher.