Crude oil prices gained last week as the International Energy Agency (IEA) revised up the global oil demand in 2022. IEA now expects the demand to go up 2.1 million barrels per day (MMbpd) to 99.7 MMbpd in 2022. However, the gain in oil prices on the back of it was limited. Because, contrasting IEA, the Organisation of the Petroleum Exporting Countries (OPEC) has made a downward revision. OPEC expects the demand to rise 3.1 MMbpd, lower by 0.3 MMbpd compared to their previous estimates. It sees the global oil demand for the year at 100.03 MMbpd.

Also weighing on the prices was the US inventory data. According to the data released by the US Energy Information Administration (EIA), the oil stocks rose 5.5 million barrels, much higher than the expected 0.1 million barrels increase.

So, on a weekly basis, Brent futures on the Intercontinental Exchange (ICE) appreciated 3.2 per cent to end the week at $97.2 per barrel. Similarly, on the Multi Commodity Exchange (MCX), crude futures (September expiry) went up 4.1 per cent to close the week at ₹7,331 per barrel.

While fundamental factors are not giving any clear indication, the charts are now signalling bearishness as the Brent futures price stays below the key $100-mark.

Brent futures ($97.9)

The Brent futures on the ICE closed higher at $97.9 on Friday compared to $94.2 a week ago. However, it remains below the critical $100-mark and the price action hints that even if there is a rally above $100, it can be restricted to $105. This is a strong resistance where a falling trendline and the 38.2 per cent Fibonacci retracement level of the prior decline come together. So, a rally beyond $105 is less likely.

Either the contract can resume the downtrend from current levels itself or after extending the ongoing corrective rally to $105. On the downside, the contract has support at $86 and $80. If the Brent futures drops and touches $80, there could either be a consolidation or another corrective rally thereafter.

MCX-Crude oil (₹7,331)

The September crude oil futures on the MCX went up to end the week higher at ₹7,331 on Friday compared to ₹7,043 by the end of the preceding week. Like the Brent futures, the MCX futures too can be expected to begin the downswing. It can either resume the fall from current levels or after a rally to ₹7,900.

Once the contract starts the next leg of downtrend, it can be expected to fall to ₹6,650 – its nearest support. A breach of this support can drag MCX futures to the subsequent support at ₹6,300.

Post falling to this level, we may witness a corrective rally which can take the contract back to ₹6,650. After that, there might be a consolidation wherein the contract could oscillate within ₹6,300 and ₹6,650.