Oil prices were largely flat for the week despite witnessing considerable intraweek volatility. Supply concerns continue to be the headlines as the OPEC countries are not meeting their production targets, let alone further increase in the output.

According to a Bloomberg report, Nigeria and Libya contributed considerably to the drop in output. Even the OPEC kingpin Saudi Arabia saw a decline. While the Nigerian output dropped by about 100,000 barrels per day (bpd), Saudi’s output is estimated to be lower by 210,000 bpd.

That said, in the recent OPEC Plus meeting, the group decided to stick to the earlier plan of increasing the output by 648,000 bpd in July and August. However, whether these targets will be met is still doubtful. Considering the demand concerns on the back of recessionary fears, the major oil producers will be wary of pumping more. This will keep the tightness in the market alive and thus, the upward pressure on the oil prices will remain for quite some time.

Even the chart of crude oil shows that the trend remains bullish as prices continue to stay above some key levels.

Brent futures ($111.6)

The continuous Brent futures contract on the Intercontinental Exchange (ICE) lost 1.3 per cent as it ended the week at $111.6 versus preceding week’s close of $113.1. But the overall trend remains bullish. Supporting this, the rising trendline remains valid and the contract lies above the important support of $108. On the upside, the resistance is at $115.

Therefore, there are high chances for Brent futures to consolidate between $108 and $115 in the near term.

A breakout of $115 can lift the contract to $120-122 resistance band. A breach of this can take it to $130. Alternatively, if the price drops below $108, it might decline to the support band of $98-100.

MCX-Crude oil (₹8,605)

The crude oil futures on the Multi Commodity Exchange (MCX) rallied to mark an intraweek high of ₹9,015 last Wednesday. But then it declined from that level to close the week lower at ₹8,605. Nevertheless, for the week, the crude futures was up by nearly 2.8 per cent unlike Brent futures. Weakness in the Indian rupee aided the price rise.

Since it closed below ₹8,800, our expectation of the contract oscillating within the price levels of ₹8,000 and ₹8,800 stays valid. That said, the overall bias remains bullish, and we could eventually see a breakout of ₹8,800. A breach of ₹8,800 can take the contract to ₹9,400, a breakout of which can lift the contract to ₹10,000.

However, if the crude futures slip below the support at ₹8,000, it will most likely dip to ₹7,600 – a support level. Below that, ₹7,200 is the next support. This is a key level because a breach of this base can turn the trend bearish.