Crude oil futures fell 1.77 percent to Rs 4,332 per barrel on February 19 on profit booking despite a sharp drawdown in US crude inventories.

The US Energy Information Administration (EIA) reported that US crude oil inventories fell by 7.3 million barrels for the week ended February 12 as compared to market expectation of 2.4 million barrels decline.

While some Texas households had power restored on Thursday, the state entered its sixth day of a cold freeze and shut some oil refining facilities in the region.

“NYMEX crude trades about 1.3% lower near $59.75/bbl. Crude oil has retreated from Jan.2020 highs amid selling pressure in the equity market on the back of higher bond yields, forecasts of improved weather in the US after a recent cold snap, mixed US economic data and prospect of higher OPEC output. However, supporting price is the EIA inventory report which noted a bigger than expected decline in US crude stocks and a drop in US crude production. Crude may see extended losses amid position squaring ahead of contract expiration”, said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

Sunand Subramaniam, Senior Research Associate, Choice Broking said, “For the week ahead, we are expecting Global and MCX Crude prices to witness uptrend with fall in US crude inventories along with American stockpiles. Moreover, global oil prices are expected to rise in the week ahead as the US lawmakers moved closer to approving President Joe Biden’s $1.9 trillion COVID-19 aid bill along with vaccine rollouts. However, extreme bullishness can be capped, as the US Dollar Index has found strength amid the worries of the western countries regarding uncertain economic recovery.”

West Texas Intermediate crude tanked 1.5 percent to $59.61 per barrel, while Brent crude, the London-based international benchmark slipped 1.02 percent to $63.28 per barrel.

MCX iCOMDEX Crude Oil Index inched lower 88.25 points, or 1.77 percent, at 4,906.98 at 15:43.

In the futures market, crude oil for February delivery touched an intraday high of Rs 4,361 and an intraday low of Rs 4,257 per barrel on MCX. So far in the current series, black gold has touched a low of Rs 3,486 and a high of Rs 4,500.

Crude oil delivery for February slides Rs 78, or 1.77 percent, to Rs 4,332 per barrel at 15:44 hours IST with a business turnover of 2,324 lots. 

Crude oil delivery for March edged lower Rs 72, or 1.63 percent to Rs 4,343 per barrel with a business volume of 2,246 lots.

The value of February and March’scontracts traded so far is Rs 1,073.70 crore and Rs 448.90 crore, respectively.

Trading strategy

Tapan Patel- Senior Analyst (Commodities), HDFC Securities

Crude oil prices pared weekly gains as a cold snap in US has shut demand from refiners putting pressure on crude oil inventories. The cold snap in Texas has shut some oil refining facilities limiting the demand.

We expect crude oil prices to trade lower with support at $58.50 and resistance at $61. MCX Crude oil March has support at Rs 4,290, resistance at Rs 4,380.