Oil prices rallied through the last week. Brent crude oil futures on the Intercontinental Exchange (ICE) ($96.30/barrel) and crude oil futures in the domestic market (₹8,578/barrel) rose 9.3 per cent and 7.4 per cent respectively.
Brent futures ($96.30)
Brent crude futures saw an uptick in price in the first half of last week. During the latter half, it stayed flat, retaining the gains.
However, there is a barrier ahead at $98, where a rising trendline coincides. This can trigger a price correction, possibly to $90.50, its 21-day moving average. Subsequent support is at $88.75. A breach of this can turn the outlook bearish. Support below $88.75 is at $84.
On the other hand, if Brent crude futures breaks out of $98, it can extend the rally to $101.50. A rally past this level can lift the contract to $110.
MCX Crude Oil (₹8,578)
Crude oil futures (Sept) rallied last week and hit a high of ₹8,791 on Thursday. But it ended the week lower at ₹8,578. A weekly close above ₹8,500 is a positive sign and the price action shows that there is a buying interest between ₹8,400 and ₹8,600.
Therefore, further upside is highly likely. That said, before the next upswing, the contract might moderate, possibly to ₹8,085 where the 21-day moving average lies.
A rally, either from the current level of ₹8,578 or after a dip to ₹8,085, can lift crude oil futures to ₹9,000. A breakout of ₹9,000 can take the contract to ₹10,000.
On the other hand, if the support at ₹8,000 is breached, the crude oil futures can fall to ₹7,500.
Trade strategy: Buy crude oil futures if the price dips to ₹8,100. Target and stop-loss can be ₹9,000 and ₹7,800, respectively.