Crude Oil prices are expected to trend lower today pressured by US shale production which increased to a new high according to the EIA report released this week.
The weakness comes as the market participants chose to ignore the fact that commercial held oil storage fell to its lowest level in a year and instead chose to focus on rising US shale production. The market was already plagued with concerns over OPEC supply which has been hitting yearly highs despite all the promises to curb production and stick to compliance quotas. The market is also likely to focus on the oil rigs count scheduled late tonight – a drop in active rigs could be positive for prices. OPEC is also scheduled to meet on Monday to discuss plans to implement and monitor output quotas for member countries.
Technically, the intraday trend looks weak. We expect downsides to be limited to support zone at Rs.2,980-Rs.3,000 later into the night whereas on the upside, a strong move above minor resistance at Rs.3,050 could trigger some upside in prices. In the short term, we see prices to consolidate around the current range with a negative bias. Short term support levels are currently seen at Rs.2,940 and at Rs.2,900 breaking which the commodity could once again enter into a bear market. Another key metric to note would be a rise in open interest as prices move lower which would indicate a potential bottom in the coming week.
Source: Commodity OnlinePrevious Next
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