Crude Oil is trading above its resistance and is expected to extend its gains in intraday.
Crude Oil is inching higher in intraday today as prices broke above its resistance at Rs.3165/bbl. Prices have been supported both by improving fundamentals and unwinding of a record number of short positions by hedge funds. The drop in US inventories has been key to pushing prices higher over the past few weeks along with some support from OPEC members who pledged to enforce compliance.
Even though the market sentiment has been positive all around, we would like to mention that the only positive news flow for oil comes in the form of US inventories which have been declining over the past three weeks – any reversal (increase in storage) would be very bearish for prices and cause it to correct sharply from current levels.
Crude Oil is trading at Rs.3171.0/bbl, up 11 points currently.
Technically, Crude Oil is headed for $50.0/bbl (Rs.3,210) and we see upside being capped at this level with chances of a minor correction in the coming week. On the downside, profit booking moves should be limited to the critical support level at Rs.3,080 below which we see a short term trend reversal in oil. While $50.0 would be a key resistance level, a daily close above this should carry prices higher to $51.0-$51.50/bbl in the short term. For intraday, we advise buying above Rs.3170.0 for targets at Rs.3210-Rs.3240.
Source: Commodity OnlinePrevious Next