Crude oil prices firmed up last week. Brent crude oil futures on the Intercontinental Exchange (ICE) ($109/barrel) and crude oil futures in the domestic market (₹10,408/barrel) were up 3.5 per cent and 10.8 per cent respectively. Below is an analysis.
Brent futures ($109)
Brent crude oil futures after opening with a gap-up last Monday, could not extend the rally and dropped. However, on Thursday, it rose 7.8 per cent, indicating the broader bullish bias is intact.
The rebound happened on the back of the 21-day moving average at $100. The longer lower wicks on the recent weekly candles denote good buying interest, particularly between $96 and $104.
Going ahead, there is a good chance for Brent crude futures to rise, possibly to $120. A breakout of this can lift the contract to $130. Only a decisive breach of the support at $96 will turn the outlook bearish. Support below $96 is at $90.
MCX-Crude oil (₹10,408)
Crude oil futures on the MCX performed better than the Brent crude futures by posting a bigger gain of 10.8 per cent. It marked a new all-time high of ₹10,640 on Thursday before moderating to ₹10,408.
The chart shows a strong bullish momentum and so, we might see further upside in the coming days. The contract can rally to ₹11,200 soon if it can retain the existing momentum.
Nevertheless, there is a good chance for the contract to see a moderation to ₹9,800-10,000 price band. The corrective decline might extend to ₹9,300 before the crude oil futures makes fresh highs.
Trade strategy: Go long at ₹10,000 and ₹9,400. Stop-loss can be ₹8,700. Book profits at ₹11,200. The contract can experience high volatility and so, risk-averse traders can stay out.