Crude oil prices did not see much action last week. The Brent crude oil futures on the Intercontinental Exchange (ICE) ($70.60/barrel) was up by a marginal 0.3 per cent.; whereas the crude oil futures on the MCX (₹5,841/barrel) posted a minor loss of 0.2 per cent.
Brent futures ($70.60)
Brent crude oil futures which hit a low of $68.63 early last week, saw a mid-week recovery. While it marked an intra-week high of $71.25 on Wednesday, it moderated and closed the week below the resistance at $70.70.
The price action shows that the contract is stuck within the price band of $69 and $70.70.
If there is a recovery from the current level, Brent crude futures will face hurdles at $72.50 and $75. In case there is a fall below $69, it can extend the downswing to $62.
MCX-Crude oil (₹5,841)
The chart of April crude oil futures shows that it is now consolidating between ₹5,750 and ₹5,930.
Nevertheless, the downtrend has not been negated although the support at ₹5,750 is a good base.
From the current level, crude oil futures can see an uptick in price, possibly to ₹6,000-6,100 price band. But then, it is likely to resume the downtrend. In such a case, crude oil futures can slip below ₹5,750 and touch ₹5,500 in the near term.
However, if the contract surpasses ₹6,100, it can recover to ₹6,300. But at the moment, bearish bias prevails.
Trade strategy: Short crude oil futures if the price inches up to ₹6,100. Place initial stop-loss at ₹6,350. When the price drops to ₹5,800, revise the stop-loss down to ₹6,100. Liquidate the shorts at ₹5,500.
