Crude oil prices, which saw a mid-week rally, scaled lower towards the end of the week. While Brent crude futures lost 1.2 per cent to wrap up the week at $92.2 per barrel, the crude oil futures on the MCX posted a gain of 0.9 per cent to close the week at ₹7,542 a barrel.
The mid-week rally was largely powered by a drop in the crude oil inventories in the US. According to the data by the Energy Information Administration (EIA), the crude oil stockpiles in the US shrank 2.2 million barrels versus the expected drop of 0.7 million barrels for the week ended September 22.
Largely, the market expects a deficit for the rest of the year, and this is likely to keep the prices higher. Substantiating the bullish inclinations, the charts show that the prices remain above key levels and this means the bulls are in the driving seat.
MCX-Crude oil (₹7,542)
The October futures of crude oil broke out of the barrier at ₹7,600 and marked an intraweek high of ₹7,884 on Thursday before moderating to the current level of ₹7,542. Despite the decline in price in the last two sessions, the trend continues to be bullish. The short-term trend will remain so until the support at ₹7,000 is valid.
The crude oil futures is expected to resume the rally this week. The notable resistance levels on the upside are at ₹8,000 and ₹8,300.
On the other hand, if the price drops further and slips below the support at ₹7,375, the contract might fall to 7,240. Support below this level can be seen at ₹7,000.
Trade strategy: Last week, we suggested going long on the break of ₹7,600. So, traders would be holding buys with stop-loss at ₹7,300. Retain this trade.
When the contract touches ₹8,000, tighten the stop-loss to ₹7,850. Book profits at ₹8,200.