Crude Oil Outlook - Aug 23, 2021 - Reliance Securities

Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

International oil prices crashed on Friday and witnessed the biggest week of losses in more than nine months as investors sold futures in anticipation of weakened fuel demand worldwide due to a surge in COVID-19 cases.

Domestic oil prices also witnessed a big crash on Friday, tracking overseas prices.

Cases have risen in China and other countries like Australia and New Zealand, where restrictions have been imposed.

Additionally, according to a Bloomberg report, several U.S. companies have delayed return-to-office plans due to the fear of rise in cases.

The U.S. dollar hit a nine-month high and weighed on oil prices.

Supply is steadily increasing. U.S. production rose to 11.4 million barrels per day in the most recent week, and drilling firms added rigs for the third week in a row, services company Baker Hughes said.

U.S. oil rigs rose eight to 405 this week, their highest since April 2020.

Reflecting investor sentiments, data from U.S. CFTC showed that money managers cut their net long U.S. crude futures and options positions by 8,634 contracts to 274,968 in the week to August 17.

International oil prices have started higher this Monday morning in Asian trade amid short covering and as the U.S. Dollar has started weaker this Monday morning.

Technically, if WTI Crude Oil continues to trade below $63.00 level we could witness the Bearish momentum could continue up to $62.25-$61.90 levels. Resistance is at $63.90-$64.40 levels.

Domestic oil prices could also start with small gains this Monday morning, tracking overseas prices.

Technically, if MCX Crude Oil August trades below 4700 we could witness prices test 4610-4570 levels. Resistance is at 4760-4790 levels.

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Source : Equity Bulls

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