The rise in crude oil price continued last week as well. The Brent crude futures on the Intercontinental Exchange (ICE) was up 6 per cent as it closed the week at $84.7 a barrel. The MCX crude oil futures (April contract), on the other hand, gained 6.4 per cent and ended the week at ₹6,593 per barrel.

The upward push came from the surprise production cut announced by OPEC and its allies last Sunday. They have announced an output cut to the tune of 1.16 million barrels per day and this is likely to stay until the end of this year.

Also read: BL Explainer: What will be the impact of OPEC’s sudden oil output cut

Besides, the crude oil consumption in the US seems to be improving. The latest Energy Information Administration data shows that the inventories in the US fell by 3.7 million barrels against the expected drop of 1.6 million barrels for the week ended March 31.

MCX-Crude oil (₹6,593)

The April futures of crude oil moved above the 50-day moving average last week. The contract made an intraweek high of ₹6,717 before closing a little lower at ₹6,593. Considering that the crude oil futures has a roadblock at ₹6,800, it may not be easy for the bulls to reproduce last week’s performance this week.

Nevertheless, a breach of ₹6,800 will mean the uptrend will gain more momentum. In fact, a breach of ₹6,800 can even turn the medium-term outlook bullish. In such a case, we might see the price crossing over the ₹8,000-mark and move up towards ₹8,800 – a key resistance.

On the other hand, if there is a fall from here, the contract can find support at ₹6,300 and ₹6,000.

Trade strategy: The stop-loss for the shorts at ₹6,300 was triggered last week. This week, since there is a resistance at ₹6,800, traders can stay on the fence for now. Initiate fresh longs if the crude oil futures break out of ₹6,800. Stop-loss and target can be ₹6,300 and ₹7,900 respectively.

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