Crude oil price fell last week despite a recovery during the last couple of sessions. The Brent crude futures on the Intercontinental Exchange (ICE) lost 1.4 per cent as it ended the week at $76 a barrel. Likewise, the MCX crude oil futures (June contract) was down 1.5 per cent last week, as it closed at ₹5,916 per barrel on Friday.

An increase in the US crude oil inventory weighed on the prices. According to the latest data by the Energy Information Administration (EIA), the inventory went up by 4.5 million barrels versus the expected drop of 1.4 million barrels.

However, rumours emerged that the OPEC+ is all set to announce a production cut worth one million barrels per day (mb/d) when they meet on June 4. This is in addition to the 2 mb/d cut and 1.6 mb/d voluntary cut announced in April. Thus, we are looking at a possible 4.6 mb/d cut in oil production. On the back of this, the price propped up on Thursday and Friday.

MCX-Crude oil (₹5,916)

The June futures of crude oil fell and marked an intra-week low of ₹5,567 on Wednesday, before recovering and ending the week at ₹5,916. Thus, despite all the volatility, the contract has come back to close within the narrow range of ₹5,900-6,000. The broader range will be ₹5,570-6,200.

An upward bias is created last week following reports of a possible production cut. Nevertheless, for the crude oil futures to turn the trend bullish, it should surpass the 50-day moving average at ₹6,200. Resistance above ₹6,200 is at ₹6,500.

On the other hand, if the contract falls from the current level, there is a support band of ₹5,570-5,600. Subsequent support is at ₹5,500.

Trade strategy: Given the prevailing price action, there is no clarity on trend. Moreover, the risk-reward ratio is unfavourable for both long and short positions. Hence, it is better to stay away from trading crude oil futures at this juncture.