Volatile Crude : Impact on Indian market

Oil prices recovered on Friday, after making its two month low, falling almost 5 per cent in previous session. Traders are fearful after U.S . Crude oil weekly inventory came lower than expected at -2.2 M Vs -4.1 M. 

On the MCX July Crude Oil future opened on a nominally negative sentiment in the July 08,2016 trading session. In the present scenario Crude future is trading above its technical level of 3000 and it seems to sustain above this level. Going ahead, Crude Oil future may continue with the current momentum to make highs above 3080/3100 levels. On the lower side, 2985/2970 will act as a major support level for further sessions. On the other hand, 3110/3150 will be the major hurdle. MACD indicator is indicating a positive move above the level of 3050.  

On Nymex Brent crude futures were trading at $46.92 per barrel on Friday, up 52 cents, or 1.12 percent, from their last settlement. U.S. crude was up 43 cents, or 0.95 percent, at $45.57 a barrel.

The Indian market's crude index is down around 1 per cent, as stocks like Oil India fell by 2 per cent at 360. GAIL is struggling around its vital support at 375, down by 2.3 per cent. IOC  is down by 1.1 per cent to break 470 level. The stock of ONGC is almost down by 1.5 per cent to trade below its technical level of 225. 

Going ahead the outlook would likely be choppy as the threat of supply reductions could tighten markets. The price fall in response to the inventory reduction has been an overreaction as crude stocks have now fallen. However traders are advised to keep patience and hold these stocks from longer term perspective.