Crude oil futures were trading in the green on Wednesday, notwithstanding some profit booking in the international markets. Crude oil prices have firmed up on Israel-Iran tensions, and there is a view in certain sections that the prices could double to $150 per barrel.
The July crude oil futures were trading at Rs 6,324 per bbl on the MCX, gaining Rs 25 or 0.4% over the previous closing.
Meanwhile, on the COMEX, crude oil contracts were trading around $74.54 per bbl, declining by $0.30 or 0.40%. Brent oil futures were down by $0.44 or 0.58% and hovering near the $76.01 mark.
Commenting on the current trends, Naveen Mathur, Director – Commodities & Currencies at Anand Rathi Shares and Stock Brokers said that the geopolitical tensions have once again gripped oil markets, this time driven by the escalating Israel-Iran conflict and the potential for supply disruptions, which have acted as a catalyst for oil’s dramatic 10% price rise over the last five days.
Moreover, tight inventories and a declining number of operational oil rigs have kept the prices in a positive territory throughout June, so far.
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“The recent escalation in tensions has added fuel to the rally, with prices up nearly 20% so far this month. There is a heightened risk to Iran’s oil output (OPEC’s third-largest producer), and potential disruptions around the Strait of Hormuz—through which roughly 20% of global oil shipments pass—are fueling volatility. The fact that both sides have targeted energy infrastructure is a clear cause for concern, with the key export hub of Kharg Island and oilfields in Iraq potentially at risk. However, the threat to block the Strait of Hormuz remains the biggest wild card,” Mathur added.
Mathur highlighted that oil rigs continue to decline and are now at their lowest level in four years.
Moreover, despite OPEC’s announcement of an aggressive unwinding of production cuts, the actual output increase in May was much lower than expected.
Tech View
2 things to watch out for
1. Key levels: Resistance & Support
MCX Crude Oil is displaying a bullish trend as it trades above the 200-Daily Moving Average (DMA) at Rs 5,846, though it faces a significant resistance level at Rs 6,100, and a breakout above this could trigger further upside momentum, the Anand Rathi expert said.
Key resistance levels are seen at 6300, 6460, and 6850, while support is placed at 6011, 5840, and 5700.
2. Moving Averages: A positive crossover of the 21 and 50 Daily Moving Averages reinforces the bullish sentiment.
The MACD indicator continues to trend above the zero line, adding strength to the upward outlook.
Outlook
WTI Crude Oil is approaching a crucial zone between $70 and $73, with $68 acting as a strong support level for a potential upside rally towards $75–$78. Additional support levels are identified at $65.90, $64, and $62.40.
Also Read: Commodity Radar: Copper gets a Chinese glow. Is it time to mine profits?
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
