Crude Oil daily chart has formed “Rising channel” pattern. The trend remains consolidated as the last session seems have retested the channel’s resistance slope line. As per the technical aspects of the pattern, the retest is likely to turn the trend to bearish. Once the same breaks below the interim support line, sell signal will be confirmed. The downside rally could test $63-62(4008-3944) levels in the upcoming sessions. Alternatively, if market breaks above the resistance level then it might continue in bullish trend. Resistance holds at $64(4071) and support at $60(3817).
Crudeoil on MCX settled up 1.59% at 4100 amid expectations that global oil demand growth and ongoing OPEC cuts would continue to reduce excess supplies. The rally in oil prices continued unabated amid investor optimism that key factors supporting the late-2017 rally such as strong OPEC compliance, and bullish oil demand growth amid rising global economic growth would offset the expected ramp up in non-OPEC output.
Also supporting oil prices was Wednesday’s bullish inventories data showing an unexpected drop in US production and larger than expected draw in US crude oil supplies. Market fundamentals going into 2018 were strong due to ongoing production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and Russia that coincide with healthy demand growth.
The production cuts started in January last year and are set to last through 2018. U.S. commercial crude oil inventories fell almost 5 million barrels in the week to Jan. 5, to 419.5 million barrels. Global Risk Management said this was despite U.S. oil production, currently at 9.5 million barrels per day (bpd), likely breaking through 10 million bpd.
Goldman Sachs noted recently that markets are dealing with “two offsetting dynamics” as stronger economic growth has fuelled oil demand, boosting oil prices, but that tends to attract a ramp up in shale output which could cap long-term oil prices.
Technically market is under fresh buying as market has witnessed gain in open interest by 4.42% to settled at 23981 while prices up 64 rupees, now Crudeoil is getting support at 4053 and below same could see a test of 4005 level, And resistance is now likely to be seen at 4136, a move above could see prices testing 4171.
* Crudeoil trading range for the day is 3980 – 4165
* Crude oil gained amid expectations that global oil demand growth and ongoing OPEC cuts would continue to reduce excess supplies.
* OPEC’s producers, Iran and Iraq, this week cut their supply prices to remain competitive with customers.
* Crude inventories fell almost 5 million barrels in the week to Jan. 5, to 419.5 million barrels.