Commodity Radar: Rally accelerates as crude oil prices jump 10% in a month. Know why to hold your horses

Time of India

a day ago

Although
crude oil prices
are currently buoyed by tight supply and positive sentiment, the outlook for the second half of 2025 is clouded by the prospect of rising supply and persistent demand-side risks, says Naveen Mathur, Director - Commodities & Currencies at Anand Rathi Shares and Stock Brokers. Edited excerpts:
Crude oil futures were trading lackluster on the
MCX
in the early trade on Wednesday, taking cues from the prices in the international markets. The trade remains subdued as investors prefer to remain cautious amid the US-China trade talks whose outcomes are yet to become clear.
Prices were up on Tuesday as negotiations were into their second day. There is an anticipation of a deal between the two largest oil consuming economies.
The MCX June contracts were trading around Rs 5,584 per bbl in the early trade, marginally higher by Re 1 or 0.02% over the previous closing price.
On the COMEX, the US WTI oil futures were trading at $64.83 per bbl, losing by $0.15 or 0.23% while the Brent Oil contracts were down by $ 0.170 or 0.250% at $66.70.
Commenting on the recent trends in the oil markets, Naveen Mathur, Director - Commodities & Currencies at Anand Rathi Shares and Stock Brokers said that crude oil prices have risen almost 10% so far this month driven by a tightening of spot markets amid peak seasonal demand, declining rig counts, US–China
trade talk
optimism and the ongoing geopolitical tensions.
'Despite OPEC+ raising production quotas since April, actual increases in supply have trailed official targets and thus inventories continue to remain tight. The U.S. oil rig count fell by 9 last week to 442—the lowest since October 2021, as shale producers cut activity amid crude prices in the low $60s, weak demand outlook, and OPEC+ output hike plans,' Mathur said.
Saudi Arabia is pushing OPEC+ to accelerate oil supply hikes in August but a slew of data points, including refinery throughput, cargo exports, pipeline flows, and indications of stockpiling does not indicate any major restoration of output by Saudi Arabia.
Saudi Arabia's state oil firm Saudi Aramco will ship about 47 million barrels to China in July, a tally of allocations to Chinese refiners showed, 1 million barrels less than June's allotted volume. A Reuters survey found that
OPEC
oil output rose in May, although the increase was limited as Iraq pumped below target to compensate for earlier overproduction and Saudi Arabia and the United Arab Emirates made smaller hikes than allowed.
Tech View
MCX crude Oil has showcased strong bullish momentum with a significant breakout above the horizontal trend line at Rs 5,500, suggesting potential upside levels of Rs 5,717–6,035, the Anand Rathi expert said while highlighting that a positive crossover of the 21-day and 50-day moving averages further confirms a robust bullish trend.
In his view, momentum indicators like MACD remain favorable, sustaining above the zero line, which strengthens the outlook.
ETMarkets.com
Trading strategy
Despite supportive near term fundamentals, one needs to stay cautious in crude oil as the market is expected to be in surplus later this year due to a Saudi-led output surge and increasing production from outside OPEC+, Mathur warns.
On the other hand, the US leading indicator has stayed below zero (-4 in April) for 34 months, signaling potential downside for oil prices amid rising stagflation risks, weak Chinese recovery, and uncertainty from US tariffs—all pointing to softer oil demand.
Key support for MCX crude oil lies at Rs 5,430–5,320, where any retracement could find a strong base for a rebound, Mathur said.
Similarly, international benchmark WTI Crude Oil has broken past the critical resistance at $65, paving the way for further gains towards $68.20–$70.58, he said, adding that the support zone between $65 and $63.44 underpins this uptrend, ensuring stability.
Both benchmarks reflect positive sentiment driven by technical factors, highlighting a strong potential for upward movement in the crude oil market.
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