Crude oil, after facing volatile sessions over the past week, closed lower compared with the preceding week’s close. The Brent crude futures on the Intercontinental Exchange (ICE) fell 3.1 per cent as it ended the week at $73.9 a barrel. The MCX crude oil futures (July contract) was down 3.4 per cent as it closed at ₹5,675 per barrel on Friday.

While the energy commodity managed to stay in the green till mid-week, the prices slumped in the second half. Concerns about global growth and a surprise increase in the interest rate by the Bank of England, by 50 basis points against the expected 25 basis points, weighed on crude oil.

There was a better-than-expected draw from the crude oil inventories in the US. According to the Energy Information Administration (EIA) data, the inventories in the US shrank 3.8 million barrels against the expected increase of about 0.3 million barrels. But this was not enough to arrest the intra-week price fall.

The charts show that a key support remains valid despite last week’s fall, leaving a good chance for a rise from here.

MCX-Crude oil (₹5,675)

The July futures of crude oil marked an intra-week high of ₹5,975 on Wednesday, before falling sharply. On Friday, it made a low of ₹5,546. Although the contract briefly traded below the support at ₹5,600, it managed to close the week above it. Therefore, the broad range of ₹5,600-6,200 stays true.

We might see a rebound in price this week. But crude oil futures could face resistance between ₹5,900 and ₹5,925, where a falling trendline could possibly block the upside.

Above these levels lie the resistance of ₹6,200, a break of which can turn the medium-term trend bullish. On the other hand, a fall below ₹5,600 can intensify the sell-off. That can lead to a potential fall below the nearest support at ₹5,500 towards ₹5,280.

Trade strategy: The trailing stop-loss at ₹5,700 for the longs taken at ₹5,600 last week has been hit. Traders can consider fresh longs now at ₹5,675 with a stop-loss at ₹5,540. Exit at ₹5,900.

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