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The crude oil prices has got a breather last week, after having fallen for five consecutive weeks and tumbling 19 per cent from around $52 per barrel to $42 per barrel. The Crude Oil futures contract traded on the New York Mercantile Exchange (NYMEX) had surged about 7 per cent last week to mark the end of the five consecutive weeks of fall. The bullish momentum has extended in this week also and the price has gained about 2 per cent so far. It is currently trading at around $47 per barrel.
Data showing a fall in the US production and the number of rigs falling for the first time since January triggered the oil prices to reverse sharply higher last week.
On the domestic front, the Crude Oil futures contract on the Multi Commodity Exchange (MCX) snapped its five consecutive weeks of fall and has surged about 7 per cent last week.
Outlook The short-term outlook is positive for the oil prices. The NYMEX-Crude Oil contract has an immediate support in the $45.25-$45 zone which is likely to limit the downside in the near term. As long as the contract trades above $45, the possibility is high of it rallying to $48.7 or $49 in the short term. Further break above $49 will then increase the likelihood of the contract extending its rally to $51 or $51.5.
The contract will come under pressure once again only if it falls below $45. Such a break can take it to $44 initially. Further break below $44 can drag it to $42 or even lower levels thereafter.
On the domestic front, the MCX-Crude Oil contract has reversed sharply from just below a key support level of ₹2,800 per barrel. It is currently trading at ₹3,040 per barrel. Immediate support is at ₹2,900 and the key support is at ₹2,800. Immediate resistance is at ₹3,065 – the 55-day moving average. A strong break above it can take the contract higher to ₹3,180 or ₹3,230 in the coming weeks. Further break above ₹3,230 will increase the likelihood of the contract targeting ₹3,500 levels thereafter.
Note: The recommendations are based on technical analysis and there is a risk of loss in trading.
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