Crude oil saw a volatile week as developments on both supply and demand fronts kept the price moving. The Brent crude futures on the Intercontinental Exchange (ICE) was up 2.7 per cent as it closed the week at $103.7 a barrel. But in the domestic market, the gain was a marginal 0.9 per cent as the crude futures closed at ₹7,660 a barrel versus preceding week’s close of ₹7,594.

Concerns about tight supplies eased a bit as the European Union (EU) tweaked sanctions on Russian oil which will allow ‘third countries’ to buy oil from Russia. As per EU’s definition, the third country is “a country that is not a member of the European Union as well as a country or territory whose citizens do not enjoy the European Union right to free movement”.

However, on the other hand, a fresh rise in coronavirus cases in China, largest consumer of the energy commodity, has raised more concerns about the demand, which was already expected to be weak on the back of recessionary concerns. Therefore, going ahead, the crude oil prices could see considerable volatility.

On the charts, the price appears to move in a range and there is no clear indication of a direction in the coming week.

Brent futures ($103.7)

The price action of Brent futures on the ICE since the beginning of July shows that the contract is range bound — fluctuating within $98 and $108. At a broader level too, the contract stays within the range of $98-124.

Therefore, the short-term trend depends on the direction of the break of the narrow range of $98-108. The medium- and long-term trend depends on the direction of the break of the broader range $98-124. Either way, the support at $98 is critical.

A break below $98 can trigger a quick fall to $90. On the upside, from the current levels, the contract has resistance at $108 and $115.

MCX-Crude oil (₹7,660)

Like the Brent futures, the crude oil futures (August expiry) on the MCX too is charting a sideways trend for nearly three weeks. It has been moving between ₹7,350 and ₹8,100. Therefore, the next leg of the short-term trend can be confirmed based on the break of this range. To get a clue on the medium- and long-term trend, the contract should move out of the broader range of ₹7,150-9,000.

A breakout of ₹8,100 can lift the crude futures to ₹8,500 — the immediate resistance — initially. A breach of this level can take the contract to ₹9,000, from where there could be a price correction.

On the other hand, if it slips below ₹7,350, it can find support at ₹7,150. This is a crucial support because a breach of this can turn the tide in favour of bears. So, if this level is invalidated, the contract could see a swift fall to ₹6,650, the nearest notable support. Subsequent support is at ₹6,300.