Business Desk, ETV Bharat: Crude oil prices have risen sharply this month, hitting their highest level since early March, after Democrat Joe Biden was declared the winner of the 2020 US presidential elections and also mainly due to various pharmaceutical alliances announcing high levels of protection of their vaccine candidates.
But the recent rally is not yet over and may still have some room left, according to a commodity expert.
Sumeet Bagadia, executive director at Choice Broking Ltd, said: “WTI (West Texas Intermediate) Crude oil has shown a sharp recovery in the last seven months and tested its pre-Covid levels. Technical analysis indicates more bullishness in the counter for the long term.”
Talking on specific price levels, Bagadia said a bullish move can be expected in the WTI Crude till the level of $55 per barrel, which may also act as resistance for the near term. However, on the downside, support comes at $33 per barrel, he added.
Meanwhile, Brent has an immediate support around $36.20 and resistance comes around $58.50 per barrel, said Bagadia.
On Thursday, WTI crude oil was trading at $44.80 per barrel, closing in to the $45 a barrel mark, while Brent crude was hovering around $48 levels in New York.
As mentioned earlier, the last time WTI crude traded at $45 per barrel was in early March this year, just before Saudi Arabia and Russia disagreed on how to manage oil supply in the pandemic and started a brief oil price war that contributed to the price collapse together with the demand destruction.
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However, subsequent production cuts announced by the Organization of the Petroleum Exporting Countries (Opec) and economic stimulus packages announced by the US Federal Reserve led to recovery in oil prices.
Bagadia said that decisions pertaining with the supply cuts by the OPEC member countries will continue to play a key role in determining the movement of global crude prices in the near term.
“The production scenario of the OPEC member countries reported on a monthly basis also play a critical role,” he added.
Furthermore, future decisions taken by the Federal Reserve and various other central banks in the coming months and the trend of the US dollar Index will also affect the movement of global crude prices, said Bagadia.
Domestic crude prices
Even at the domestic level, Bagadia said that crude prices are estimated to remain bullish in the coming months as the economic revival is expected to further boost industrial demand in India, especially in the refinery sector.
“(In fact) with the rupee appreciation, we could also see reduction in import cost of raw materials including crude oil, building a healthy supply chain in India,” he added.
