Oil on track to score fifth straight weekly gain; Brent hovers at $84/bbl-mark
2 min read 28 Jul 2023, 10:15 PM ISTBack home, on the Multi Commodity Exchange (MCX), crude oil futures due for an August 21 expiry, were last trading lower by 0.15 per cent at ₹6,552 per bbl, having swung between ₹6,507 and ₹6,610 per bbl during the session so far
PremiumOil prices edged lower on July 28, but were on track to score its fifth straight weekly gain of gains as investors were optimistic that healthy demand and supply cuts will keep prices buoyant. The risk appetite in wider financial markets has been fueled by growing expectations that central banks such as the US Federal Reserve and European Central Bank are nearing the end of policy tightening campaigns, boosting the outlook for global growth and energy demand.
Brent crude slipped 24 cents to $84.00 a barrel, while U.S. West Texas Intermediate (WTI) crude dipped 24 cents to $79.85 a barrel. Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for a August 21 expiry, were last trading lower by 0.15 per cent at ₹6,552 per bbl, having swung between ₹6,507 and ₹6,610 per bbl during the session so far, against a previous close of ₹6,562 per barrel.
Oil prices on a rise
In the previous session, oil soared around two per cent higher, retreating Fed's rate hike impact, with Brent crude topping $84 per barrel-mark for the first time since April on tightening supply.
Brent is also on track for a monthly gain of 12 per cent, while WTI is set to rise 13 per cent. Both benchmarks fell by as much as $1 briefly earlier in the session, as investors took profits after WTI rose above $80 per barrel, Price Futures Group, analyst Phil Flynn told news agency Reuters.
Bolstered by supply cuts from the Organization of Petroleum Exporting Countries (OPEC) announced earlier this month, both oil benchmarks are on track for a 3.8 per cent weekly increase - a fifth straight week of gains.
What's driving crude oil?
-Bullish demand expectations were boosted on Thursday after US second quarter gross domestic product grew at a forecast-beating 2.4 per cent, supporting Federal Reserve Chairman Jerome Powell's view that the economy can achieve a so-called "soft landing."
-Investors are warming up to the idea of peak rates getting ever closer, while it is looking increasingly probable that the United States will avoid recession, according to analysts.
-Fresh data released on Friday showed some of the euro zone's top economies displayed unexpected resilience in the second quarter even as a raft of indicators pointed to renewed weakness ahead, as manufacturing ails and services slow.
-Meanwhile, policymakers in China have pledged to step up stimulus measures to invigorate the post-COVID recovery after the world's second-largest economy grew at a frail pace in the second quarter.
-On the supply side, evidence of tightening is mounting, given declining US inventories and Saudi Arabia's voluntary cut of 1 million barrels per day, according to Commerzbank analysts, highlighting this month could have seen OPEC oil production plunge to its lowest level since the autumn of 2021.
-"We see the oil market undersupplied," UBS analysts said in a report. "We retain a positive outlook and look for Brent to rise to $85–$90 over the coming months."
Technical View
‘’Crude oil prices climbed today recouping losses from the previous session, supported by supply tightness owing to OPEC+ production cuts and renewed optimism on the outlook for Chinese demand and global growth,'' said domestic brokerage firm Religare Broking Ltd.
Religare Broking has mild-bullish sentiments on MCX Crude Oil.
‘’MACD divergence suggest mild positivity. Extended gains above 6,630 region may strengthen the prices further. Whereas, a dip below 6,520 may weaken the prices for the day,'' said the brokerage firm in its research report. Religare sees technical levels between ₹6,720 - ₹700. The turnaround is seen at ₹6,630.
