Pressure has been mounting on crude oil prices since the beginning of this week. After a brief recovery following the OPEC (Organization of the Petroleum Exporting Countries) decision to cut production, the prices have started to fall again over the last few days.

The crude futures contract on the New York Mercantile Exchange (NYMEX) was broadly range-bound between $50 and $54 per barrel since the last week of November. The contract has declined sharply below $50 this week and is currently trading at $48.5.

On the domestic front, the crude oil futures contract on the Multi Commodity Exchange of India (MCX) has broken below the key ₹3,700-3,600 per barrel support zone. It is currently trading at ₹3,460 per barrel.

Outlook

Though the overall sentiment continues to remain bearish, a strong and crucial long-term support near current levels on the charts leaves the near-term outlook mixed. For the NYMEX-Crude Oil ($48.5 per barrel) contract, a key long-term support is in the $47.20-46.80 region.

Similarly, for the MCX-Crude Oil contract the support is at ₹3,400. Whether the prices manage to bounce from these supports or not will be the key in determining the direction of the next move.

If the NYMEX contract manages to bounce from the $47.20-46.80 support zone, a relief rally to $50 and $54 is possible again. But a break below $46.8 will drag it initially to $45. A further decisive break below $45 will then increase the likelihood of the prices tumbling to $41 over the medium term.

On the domestic front, if the MCX-Crude Oil contract breaks decisively below ₹3,400. A fall to ₹3,000 is possible. A break below ₹3,000 will drag the contract lower to ₹2,700. On the other hand, if the contract manages to bounce from ₹3,400 in the coming days, an up move to ₹3,700 and ₹3,900 can be seen.

Note: The recommendations are based on technical analysis and there is a risk of loss in trading.

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