Brent crude oil futures fell 2.8 per cent last week, ending a four-week rally. While prices stayed muted, they showed a recovery on Friday. Domestic crude oil futures got a boost, rising 1.4 per cent to ₹9,937. Experts said the contract could stay sideways in the near term for now.
Oil prices largely remained muted through the last week, except for a recovery on Friday.
Brent crude oil futures on the Intercontinental Exchange (ICE) ($113.40/barrel) was down 2.8 per cent, snapping a four-week rally.
Crude oil (Nov) futures in the domestic market (₹9,937/barrel) was up 1.4 per cent last week, posting a fifth consecutive weekly gain.
Brent futures ($113.40)
Brent crude futures began last week with a gap-down, opening at $110.85 on Monday compared with the previous week’s close of $116.72.
The contract then consolidated within a narrow range of $109-112.50 until Thursday. However, on Friday, it moved above $112.50, indicating that the bulls have an edge over the bears.
Although the outlook remains positive, the prevailing price action suggests that the contract could stay sideways in the near term. That is, Brent futures may oscillate between $106 and $116 for some time before breaking out of this range.
A breakout above $116 can lift Brent futures to $120 and subsequently to $130. On the other hand, a breach of the support at $106 could weaken the near-term outlook. The next support below $106 is at $100.
MCX Crude Oil (₹9,937)
Crude oil (Nov) futures moved sideways for most of last week, oscillating between ₹9,450 and ₹9,850. On Friday, the contract breached ₹9,850 and marked a new high of ₹9,972 before closing the session at ₹9,937.
Although the chart of MCX crude oil futures appears more bullish than that of Brent crude futures, a consolidation in the latter could keep the former range-bound as well.
Crude oil futures in the domestic market could move sideways in the near term, with potential boundaries at ₹9,100 and ₹10,200. However, the bias remains bullish.
A breakout above ₹10,200 can trigger a quick rally to ₹10,500. Resistance above ₹10,500 is at ₹11,000. On the other hand, if the contract slips below the support at ₹9,100, it could extend the decline to ₹8,500, an important support level.
A breach of ₹8,500 could trigger a fresh leg of the downtrend, potentially dragging the contract to ₹7,800.