The Brent crude oil futures on the Intercontinental Exchange (ICE) ($74.70/barrel) ended flat whereas the crude oil futures on the MCX (₹6,165/barrel) posted a loss of 1.2 per cent. The difference in performance is due to the appreciation of the rupee versus the dollar.
Brent futures ($74.70)
Brent crude oil futures rallied in the first half of last week whereas it declined in the second half. Nevertheless, it closed above the support at $74.
In case, the contract slips below $74, it can decline to $71, a support. Below this, $69 is a notable base. A breach of this can lead to a sharp decline.
On the other hand, if Brent crude futures recover from the current level, it can face a barrier at $77. A breakout of this can bring back the upward momentum, essentially lifting the contract to $82.
MCX-Crude oil (₹6,165)
Since the February futures are nearing expiry, we have considered March futures for analysis.
The contract, which saw a rebound on the back of the support at ₹6,200, could not get beyond the hurdle at ₹6,380. It fell off this level in the second half of last week. In fact, crude oil futures slipped below ₹6,200.
As it stands, there is a good chance for the price to drop to ₹6,000, a good support. If this level is invalidated, the contract can fall further to ₹5,750.
But, in case, crude oil futures starts to recover from the current level, it can move up to ₹6,380 and then possibly to ₹6,550, potential resistance levels.
Trade strategy: Though the likelihood of a fall to ₹6,000 is high, the risk-reward is unfavourable for fresh trades at the current juncture. Hence, we suggest staying out.
That said, traders with high-risk appetite can short crude oil futures at ₹6,300 with a stop-loss at ₹6,400 for a target of ₹6,000.