The narrative of demand depletion on the back of a global slowdown continues to dominate and dragged crude oil price for the third consecutive week. The Brent futures on the Intercontinental Exchange (ICE) was down 1.6 per cent last week as it closed at $91.4 a barrel.

Likewise, the crude oil futures (October expiry) on the Multi Commodity Exchange (MCX) lost 1.2 per cent to end the week at ₹6,810 per barrel. The World Bank also warned that the world could face a recession in 2023 amid sharp rate hikes by the central banks across the globe.

The latest US inflation number keeps the expectation of sharp rate hikes intact and this led to the dollar strengthening, which added further pressure on the prices of the energy commodity.

So, the fundamentals remain weak for crude oil and technically too, the trend is bearish.

Brent futures ($91.4)

The Brent futures could not move above the 20-day moving average (DMA), which is currently at $95, after several attempts last week. In fact, the contract fell back from this resistance to end the week at $91.4. Thus, the price action on the daily chart shows that the contract has been forming lower highs and lower lows over the last three months. There are no signs of a bullish reversal now and the likelihood of further fall from here is high.

Moreover, the contract lies below the critical resistance levels of $100 and $105.

Going forward, the Brent futures could decline to $86 and then probably to $80 by the year-end. The trend will turn bullish only if the resistance at $105 is breached. If that happens, the contract can rally to $115, which is a strong barrier.

MCX-Crude oil (₹6,810)

Like the Brent futures, the crude futures on the MCX too struggles to move past the 20-DMA, as it is strongly resisting the bulls. Moreover, the overall trend remains bearish and thus, the possibility of a fall from here is high.

In the coming weeks, the MCX crude futures might decline to ₹6,350, after which the bears can lose strength with this price level being a support. Support below ₹6,350 is at ₹6,000.

However, rather than a bullish reversal, after declining to ₹6,350, the contract could enter a consolidation phase where it may start oscillating between ₹6,350 and ₹7,000.

In case the contract rallies from the current level and gets past the 20-DMA at ₹7,100, it could move up to ₹7,500, a minor resistance. Above this lies the important resistance band of ₹7,850-8,000. If these levels are invalidated, the trend will turn bullish where the MCX crude futures could hit ₹9,000.

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