Crude Check: Anticipated Price Moderation on the Horizon

Oil prices experienced significant momentum last week, with Brent crude futures on the Intercontinental Exchange (ICE) surging to $96.30 per barrel, marking an increase of 9.3%. Domestic crude oil futures on the MCX also saw a robust performance, rising 7.4% to close at ₹8,578. Although Brent futures maintained their gains throughout the latter half of the week, they now face a pivotal resistance level at $98, which could lead to a potential price correction towards $90.50, should this barrier be tested and rejected.

The price rally in crude oil is primarily fueled by a mix of geopolitical tensions and a tightening supply-demand dynamic. Global production cuts from OPEC+ countries, coupled with recovering demand from major economies, have created a bullish sentiment in the market. Additionally, concerns over potential supply disruptions, particularly in the Middle East, are adding upward pressure on prices, leading investors to anticipate further price increases in the near term.

For traders and investors, the short-term outlook suggests that further volatility is likely, especially around key resistance and support levels. Should Brent crude break above $98, an extension towards $101.50 and possibly $110 could materialize. Conversely, any breach of the support levels at $88.75 or ₹8,000 for the domestic market could prompt a bearish reversal. A strategic approach would be to consider buying on dips, particularly around ₹8,100, while setting a target of ₹9,000 and a stop-loss at ₹7,800.

Source: Market Source

(Expert Note: This report was independently prepared by the Wealthova Commodities team.)