Crude oil prices declined last week. Brent crude oil futures on the Intercontinental Exchange (ICE) was down 2.1 per cent as it closed at $78.9 per barrel. Crude oil futures on the MCX lost 1 per cent and it wrapped up last week at ₹6,281 a barrel.
The prices were down despite a supply cut announcement by OPEC+ for the first quarter next year. The group agreed to reduce the supply from them by 2.2 million barrels per day (mb/d). This includes the existing voluntary cut of Saudi Arabia’s 1 mb/d and Russia’s 0.3 mb/d.
Investors remained skeptical of this measure and thus, the news did not provide the firepower for the bulls.
This apart, a more-than-expected increase in US crude oil stockpiles weighed on the prices. According to the EIA (Energy Information Administration) data, the inventory went up by 1.6 million barrels versus the expected drop of 0.1 million barrels for the week ended November 24.
On the charts, there is no clear trend.
MCX-Crude oil (₹6,281)
The December futures of crude oil made a high of ₹6,644 on Thursday before closing at ₹6,281 on Friday. Hence, the contract continues to trade within the range of ₹6,000-6,650.
A breach of ₹6,650 may enhance the short-term outlook, leading to a potential upswing to ₹7,000. Surpassing this mark could propel the crude oil futures to ₹7,250, a resistance. We might see a decline after the contract rallying to this level.
Conversely, dropping below the ₹6,000 support might initiate another downtrend leg. The price region between ₹6,000 and ₹6,070 is a support band. The closest base beneath ₹6,000 lies at ₹5,500, where the contract could rebound after a decline.
Trade strategy: The crude oil futures on the MCX remain within two important levels. Traders can stay away until either ₹6,000 or ₹6,650 is breached.
Consider initiating trade along the direction of the break of the above-mentioned range.