Crude Check: Bears make their move
Recovery likely to be short-lived
Oil prices plummeted last week, marking the largest weekly decline since March 2020. Brent crude oil futures on the Intercontinental Exchange dipped by 13.3%, falling below the $100-mark and ending the recent recovery trend. Domestic crude oil futures (Nov) saw a steeper drop of 14.9%. Brent crude futures reached a two-month low of $93.22 on Wednesday. Despite this sharp decline, the contract managed to close above the critical support level of $98.
While a slight recovery may be possible, sustaining a rally beyond $105 seems improbable, as this acts as a strong resistance point. Given the prevailing bearish trend, Brent futures are expected to continue falling either from the current $98.30 level or after a temporary bounce towards $105. Upon resuming the decline, the contract could plummet below the recent low of $93.22, possibly reaching as low as $90 and then $86.
For the outlook to become positive, Brent futures must break above $105 and maintain the upward momentum. However, given the intense selling pressure, such a move appears unlikely for now.
Crude oil (Nov) futures plummeted below ₹9,000 and are now trading under both the 21- and 50-day moving averages, signifying a weakening in the short-term trend. The weekly loss of 14.9% was the most significant since the second week of April this year, when the contract fell by 15.1%. The nearest support is at ₹8,300. A rebound from this level could trigger a brief climb towards ₹9,000. However, the ₹9,000-9,300 range is anticipated to act as a formidable resistance zone, potentially curbing any upside.
Brent crude futures are likely to resume the decline either from the present level or after a rebound towards ₹9,000. If the selling pressure endures, the downtrend could extend further, pushing the price down to ₹7,600. Should selling pressure persist, the downtrend might even extend, dragging the price down to ₹7,000. In conclusion, the prevailing sentiment remains bearish, with any recovery being expected to be short-lived.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
