Crude Check: Oil futures may extend the rally

Crude oil futures experienced a noticeable rally, with Brent crude oil futures on the Intercontinental Exchange surging 8.7 percent and domestic crude oil futures in India rising 9.9 percent. Brent crude futures had broken through the $98 and $101.50 resistance levels last week, eventually reaching a four-month high of $110 on Friday before retreating to $104.60.

While there is a possibility for a slight price dip to the $98-100 range, the overall expectation is for the contract to continue its upward trend and reach $115 in the near term. However, if the $98 support level is breached, the momentum might weaken, potentially causing the price to fall to $94 or $92.

Crude oil futures in India surpassed the ₹8,500 barrier last week, surging to ₹9,483 on Friday before closing the session at ₹9,152. In the short term, a decline in price is anticipated, but the outlook remains positive. This corrective fall could be halted at ₹8,750 or ₹8,500. A potential recovery from these levels might push crude oil futures towards ₹10,000.

Conversely, if the support at ₹8,500 is breached, the contract could experience further decline, potentially reaching ₹8,200. A significant breach could lead to a drop to ₹8,000.

For traders, a strategy could involve buying crude oil futures if the price drops to ₹8,750, with a target price of ₹10,000 and a stop-loss at ₹8,300.