Crude Oil continued to trade steady as the OPEC meeting held no surprises or decisions to cut down on supply and prop up oil prices.
The OPEC meeting held in Russia came in as a large disappointment as the cartel failed to take any concrete decisions and instead chose to enforce compliance and suggest that the oil market demand is improving. It also indicated an output cap on Libya and Nigeria but again failed to provide any figures. The market had been excited recently on news of a deeper production cut from the member countries but the lack of action came in as a disappointment. The reaction to this was muted as oil scaled new highs in intraday after the meeting was over, while it’s too early to say that the fundamentals are improving, a drop in US storage has been bullish for prices over the past few weeks. A drop in short positioning by hedge funds, as reported by the CFTC might also indicate improving sentiment in the oil markets. Hedge Funds have covered short positions in petroleum futures by 44 million barrels in the previous week and bullish bets increased 66 million barrels to a total of 500 million barrels till last Tuesday.
Light Sweet Crude futures are trading at $46.24/bbl, up almost a percent whereas domestic prices are at Rs.2,987.0/bbl, up 0.75% currently.
The bias is slightly positive on oil prices as long as it holds above support at Rs.2,940/bbl. The short term picture continues to remain neutral and we expect further upsides only above resistance t Rs.3,080/bbl for price objectives at Rs.3,150-Rs.3,200/bbl. On the downside, a daily close below support at Rs.2,940/bbl could see crude oil slip into a bearish trend again and then aim for previous lows at Rs.2,750/bbl in the coming week.
Source: Commodity OnlinePrevious Next
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