The crude oil futures contract traded on the Multi Commodity Exchange (MCX) tested the key support at ₹2900 and advanced 4 per cent to close at ₹3,097 per barrel last week thereby breaching a key resistance at ₹3,000.

Gaining bullish momentum, the contract has surged 5.5 per cent to ₹3,268 in the initial three trading sessions of this week. However, experiencing selling pressure across global commodities, the contract reversed direction and fell ₹90 or 2.7 per cent to ₹3,178 levels on Thursday taking cues for the WTI Crude Oil (Nymex).

On the global front, WTI Crude Oil has slipped $0.86 or 1.78 per cent to $47.3 per barrel on Thursday as dollar gained to seven-week high after the US Federal Reserve minutes of its April minutes signalled the possibility of the next rate hike in June.

This decline can be a corrective decline for the contract’s recent rally and it can find support either at $46 or $44.

As long as the WTI Crude Oil trades above the significant support level of $38, the medium-term uptrend will be in place and possibility of resumption of the uptrend is high. Immediate resistances are at $48 and $50.

On the domestic front, the MCX contract can find support at ₹3,050 or ₹2,900 in the near term. Traders with a short-term perspective should tread with caution in the coming week.

Both the short and medium-term trends are up for the contract. It trades well above its 50- and 200-day moving averages. Only an emphatic fall below the key support level of ₹2,800 will turn the short-term view negative.

To alter the medium-term uptrend, the contract needs to decline below ₹2,500 levels. Significant resistances are pegged at ₹3,200 and ₹3,300.

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