Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities
International and domestic oil prices rebound from the lows of the week and could end flat.
Prices initially crashed after an OPEC+ agreement to boost output stoked fears of a surplus just as rising COVID-19 infections once again threaten demand.
With the Delta variant of the coronavirus spreading worldwide fuelling a 70% rise in U.S. infections last week funds bailed exited long positions.
It was still unclear how the variant will affect oil demand.
Consumption in the United States has steadily strengthened in recent weeks, but rumours of India cutting back imports due to oversupply and fears of reduced demand weighed on sentiments.
However, after the initial crash prices rebound as improved risk appetite provided support despite data showing an unexpected rise in U.S. oil inventories.
The price gains came despite a rise in U.S. crude stockpiles for the first time since May.
Crude inventories rose by 2.1 million barrels last week to 439.7 million barrels, U.S. Energy Information Administration data showed. Analysts had expected a 4.5-million-barrel drop.
Additionally, inventories at the Cushing, Oklahoma crude storage hub and delivery point for WTI has plunged for six continuous weeks and hit their lowest since January 2020 last week.
Gasoline and diesel demand, according to EIA figures, also jumped last week, while a faster-than-expected draw in global oil inventories to pre-pandemic levels also lent support.
The market could remain range bound next week.
Concerns remained about rise in Delta variant across certain countries and the restrictions it could bring along which could dent demand.
However, prices could find support on expectations of tighter supplies through 2021 as economies recover from the coronavirus crisis.
Russia may start the process of banning gasoline exports next week if fuel prices on domestic exchanges stay at current levels, further signalling tighter oil supplies ahead.
Investors will also await inventory data next week.
On the charts, WTI Crude Oil has bounced back from 21-Weeks Moving Average which is placed at $66.80 levels above which will continue its bullish momentum up to $72.80-$76.00 levels. Support is at $70.30-$67.00 levels.
Domestically, MCX Crude Oil has bounced back from 4900 levels which will hold a strong support for further upside rally up to 5500-5700 levels. Support is at 5250-5130 levels.
Strategy: - Crude Oil August: - Buy on dips near 5300 with a stoploss at 5200 and a target at 5500.
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