Commodity Radar: MCX crude oil futures cross 200-DMA amid Israel-Iran tension. Can it breach this crucial resistance zone?
Tight inventories and a declining number of operational oil rigs have kept the prices in a positive territory throughout June, so far.
Synopsis Crude oil prices are on an upswing amid escalating Israel-Iran tensions, tight inventories, and declining rig counts. Naveen Mathur of Anand Rathi says prices could stay elevated unless tensions ease. With key resistance at Rs 6,300 and global volatility, oil remains bullish despite intermittent profit booking. Amid growing geopolitical unrest between Israel and Iran, oil prices are back in their 70s and concerns over disruptions at the Strait of Hormuz and targeted energy infrastructure, combined with declining oil rigs and tepid OPEC supply, are pushing prices higher, Naveen Mathur, Director - Commodities & Currencies, Anand Rathi Shares and Stock Brokers said. He sees that market sentiment remains bullish unless tensions ease significantly. Edited excerpts:
ADVERTISEMENT Crude oil futures were trading in the green on Wednesday, notwithstanding some profit booking in the international markets. Crude oil prices have firmed up on Israel-Iran tensions, and there is a view in certain sections that the prices could double to $150 per barrel. The July crude oil futures were trading at Rs 6,324 per bbl on the MCX, gaining Rs 25 or 0.4% over the previous closing.
Meanwhile, on the COMEX, crude oil contracts were trading around $74.54 per bbl, declining by $0.30 or 0.40%. Brent oil futures were down by $0.44 or 0.58% and hovering near the $76.01 mark.
Commenting on the current trends, Naveen Mathur, Director - Commodities & Currencies at Anand Rathi Shares and Stock Brokers said that the geopolitical tensions have once again gripped oil markets, this time driven by the escalating Israel-Iran conflict and the potential for supply disruptions, which have acted as a catalyst for oil's dramatic 10% price rise over the last five days. Moreover, tight inventories and a declining number of operational oil rigs have kept the prices in a positive territory throughout June, so far. 'The recent escalation in tensions has added fuel to the rally, with prices up nearly 20% so far this month. There is a heightened risk to Iran's oil output (OPEC's third-largest producer), and potential disruptions around the Strait of Hormuz—through which roughly 20% of global oil shipments pass—are fueling volatility. The fact that both sides have targeted energy infrastructure is a clear cause for concern, with the key export hub of Kharg Island and oilfields in Iraq potentially at risk. However, the threat to block the Strait of Hormuz remains the biggest wild card,' Mathur added.
ADVERTISEMENT Mathur highlighted that oil rigs continue to decline and are now at their lowest level in four years. Moreover, despite OPEC's announcement of an aggressive unwinding of production cuts, the actual output increase in May was much lower than expected.
1. Key levels: Resistance & Support
ADVERTISEMENT MCX Crude Oil is displaying a bullish trend as it trades above the 200-Daily Moving Average (DMA) at Rs 5,846, though it faces a significant resistance level at Rs 6,100, and a breakout above this could trigger further upside momentum, the Anand Rathi expert said.Key resistance levels are seen at 6300, 6460, and 6850, while support is placed at 6011, 5840, and 5700.
2. Moving Averages: A positive crossover of the 21 and 50 Daily Moving Averages reinforces the bullish sentiment.
ADVERTISEMENT The MACD indicator continues to trend above the zero line, adding strength to the upward outlook.WTI Crude Oil is approaching a crucial zone between $70 and $73, with $68 acting as a strong support level for a potential upside rally towards $75–$78. Additional support levels are identified at $65.90, $64, and $62.40.
Also Read: Commodity Radar: Copper gets a Chinese glow. Is it time to mine profits?
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
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