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Following the drone attack on Saudi Arabian oilfields on Saturday, crude oil prices are once again on the boil.
Brent crude futures prices hit a high of $71.95 and closed at $69.02 on Monday, gaining nearly 15 per cent. MCX crude oil contracts, too, closed 15 per cent higher on Monday.
How far can prices go? Where are the resistances?
Global prices
On Tuesday, crude prices continued to stay at higher levels; Brent crude is currently trading at $69. At $68, the commodity seems to have formed a new base, indicating persistent buying interest in the commodity.
Responding to the attacks, US President Donald Trump said Iran was behind the attacks. He even went on to tweet that the US is “locked and loaded” to respond, if the situation demanded it.
If the situation escalates, crude prices will rise further and might even appreciate towards $75 in the near term.
Domestic market
After surging 15 per cent on Monday, the October month futures contract for crude in the Multi-Commodity Exchange is trading slightly lower today. It began today’s session at ₹4,466 versus Monday’s closing price of ₹4,515, and inched up to an intra-day high of ₹4,489. It is currently trading at ₹4,470 levels.
The contract will face a hindrance at ₹4,520 levels and, if as a result, the contract witnesses profit-booking and the price moderates, it can slide towards a minor support at ₹4,465, below which support is at the psychological level of ₹4,400.
From the trading perspective, it is advised to buy only if the price breaks above ₹4,520 levels. Beyond those levels, the contract would attract further buying interest, and the price may appreciate to ₹4,585 levels, beyond which the contract has the potential to rise towards ₹4,730 over the medium term. Hence, traders can buy above ₹4,520, with a stop loss at ₹4,440.
Supports: ₹4,465 and ₹4,400
Resistances: ₹4,520 and ₹4,585
Also read: Strategic oil reserves in focus after drone attacks on Saudi Aramco facility
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