There were no takers for the Russian Sokol oil. ONGC Videsh, the overseas arm of the India’s oil explorer Oil and Natural Gas Corporation Limited, which has a stake in Sakhalin-1 project in far east was trying to sell and ended up with zero bidders. Usually, Sokol oil will be favoured by Asian buyers like China, South Korea and Singapore. No bidders means that the overall supply of the oil is going to take a hit without Russian contribution.

That said, there was another blow the oil market has to deal with. The US – Iran nuclear deal, which appeared to have reached the final stages were suspended last week. Although the negotiation could resume, there is no definite timeline. Some suggest that Russia weighing in at the final stages of the negotiation could be a reason. Russia wanted assurances from the US that the Russia – Iran trade will not be impacted by the latest sanctions that followed the invasion of Ukraine. But as expected, the US has rejected. So, there is a blame game going on. But one thing is sure. Iranian oil’s entry is getting delayed. This means that there is not going to be any relief on the supply side immediately.

Brent futures ($112.7)

The Brent futures on the Intercontinental Exchange (ICE) began the week on a strong note. Price surged to hit a fresh high of $139.1 a barrel on Monday thus cracking above the critical resistance band of $115-120. Nevertheless, the contract lost momentum and there was a swift downward reversal. The contract ended the week at $112.7 on Friday.

Despite a sharp fall, the overall bull trend is intact. It can find support at $100 and $86. Notably, there is a rising trendline support, which could fall in between $86 and $100. Until the price remains above $86, the short-term trend will be bullish. But also note that $115-120 is a resistance band. Thus, the possibility of a broad sideways trend between $86 and $120 is very much a possibility.

MCX-Crude oil (₹8,335)

Following a strong rally in Brent oil price, the continuous futures contract of crude oil on the Multi Commodity Exchange (MCX) broke out of the resistance at ₹8,750 and hit a high of ₹9,996. The psychological level of ₹10,000 is expected to act as a barrier. But the contract reversed and ended the week with a loss of 2.9 per cent.

On the daily chart, one can find an ‘evening star’ candlestick pattern, which hints at a bearish reversal. While ₹8,000 can be the nearest support, a breach of this can drag the contract to the price band of ₹7,000-7,200. Also, there is a rising trendline support. Therefore, until the support at ₹7,000 holds, the short-term bias will be positive. Since ₹10,000 can limit the upside, the contract might be charting a broad sideways trend within ₹7,000-10,000. Traders can stay out of the market given the prevailing conditions. One can consider longs when there is a strong upward reversal off the support band of ₹7,000-7,200.

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