Global crude oil prices skyrocketed on Monday following an oil processing facility and a nearby oil field in Saudi Arabia with a capacity of 5.7 million barrels a day, accounting for nearly 5 per cent of global output, coming under drone attacks over the weekend.

During Monday’s session, the October month futures contract on the Multi Commodity Exchange opened at 4,000, up 1.8 per cent, against Friday’s closing price of ₹3,928. The contract quickly moved up to an intra-day high of ₹4,314, a record 9.8 per cent intra-day gain. Thus, the futures contract has broken out of the key resistance in the band between ₹4,200 and ₹4,230; it also moved past the 100-day moving average at ₹4,083. A daily close above ₹4,230 will attract fresh buying and the contract will most likely appreciate towards ₹4,400 levels in the coming days.

Since Saudi Arabia has assured that there would be no shortage in supply to Indian refiners and because of that if the contract witnesses profit booking, the price might moderate to ₹4,200 levels. It is less likely that the contract depreciates below that level, as the volatility surrounding the commodity is not expected to settle down soon.

Generic first ICE-Brent crude futures began the week at $66.45 a barrel, 10.3 per cent higher from the previous week’s close of $60.22, and moved up to an intra-day high at $71.95. It briefly traded above the crucial level of $70 before moderating to $66 levels. The contract seems to have given up majority of the gains. The day’s close should be monitored; it now trades above $64.1 — the 100-day moving average. A close above $68 will further push the price up, whereas a close below that level could halt the uptrend temporarily. The breakout looks very strong and the futures contract will most likely gain further. Hence, traders can approach with bullish bias and initiate long positions on pull-backs with the stop-loss placed below ₹4,200.

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