Crude oil prices completed seventh weekly gain last week, indicating that the upward momentum sustains well. The Brent crude futures on the Intercontinental Exchange (ICE) was up 1.2 per cent as it ended the week at $86.8 a barrel. The MCX crude oil futures (August contract) appreciated 1.1 per cent as it closed at ₹6,934 per barrel on Friday.

The bullish demand projections by the IEA (International Energy Agency) and the OPEC (Organisation of the Petroleum Exporting Countries) last week helped in lifting the crude oil prices. Both the agencies are of the expectation that the supply tightness could lead to the demand-supply dynamics turning in favour of the price appreciating further.

Thus, despite the crude oil inventories in the US increasing by 5.9 million barrels versus the expected increase of 2 million barrels for the week ended August 4, the price remained bullish last week.

MCX-Crude oil (₹6,934)

The August futures of crude oil extended the uptrend last week. While there are no signs of a reversal on the chart, there is a strong barrier at ₹7,000. There are chances for crude oil futures to see a decline off this resistance.

In such a case, we can expect the contract to fall to ₹6,580 where the 20-day moving average lies. A breach of this level can drag the contract further to ₹6,250. Post this decline, the uptrend will most probably resume which can lead to the breakout of ₹7,000.

On the other hand, if crude oil futures break out of ₹7,000 from the current levels, rather than declining, it will open the door for the move up to ₹7,600, the nearest notable resistance. Subsequent hurdle is at ₹8,000.

Trade strategy: Wait for now and go long if the contract breaks out of ₹7,000. Target and stop-loss can be at ₹7,600 and ₹6,750. Alternatively, if the price drops, consider longs after a decline.