Kolkata: Crude oil prices may remain elevated for a longer period due to supply tightness, uncertainty and new geopolitical developments, which may act as a hindrance to the softening of inflation in the country.
All eyes are now on tomorrow’s joint ministerial monitoring committee meeting (JMMC) of the Organization of the Petroleum Exporting Countries and allies led by Russia, which will review the market and members' implementation of output cut. However, industry watchers feel that there will be no significant decision at tomorrow’s meeting which will bring down the prices of crude oil.
Rising crude oil prices could impact inflation as well as the fiscal and current account deficits and could be highlighted as a challenge in the upcoming monetary policy review of the Reserve Bank of India that starts tomorrow and will be concluded by April 5.
Already, OPEC members led by Saudi Arabia and Russia in early March have agreed to extend voluntary output cuts of 2.2 million barrels per day (bpd) to the end of the second quarter to support the market.
In the geopolitical space, Ukraine has launched drone attacks on Russian refineries in recent weeks, reducing Russia's overall refinery capacity and cutting into its refinery output. Russia too, retaliated through a combined strike by air, sea and ground-based attacks on Ukraine’s energy infrastructure.
US has started to refill its Strategic Petroleum Reserves adding a total of 2.8MM bbl over the last few months. International Energy Agency forecasts a tighter market as oil demand is likely to rise by 1.3 mbpd, up 110k bpd from last month, while supply is set to increase by 1.7 mbpd. Upbeat Chinese industrial activity boosted the country's oil demand forecast
MCX Crude Oil gained by more than 6% in the month of March 2024. “We expect that the trend will continue at an accelerated rate towards the October 2023 peak of Rs 7500 level,” said Motilal Oswal in a recent report.
The 20-moving average has crossed above the 100 EMA (Exponential Moving Average) on daily chart along with the 14-period relative strength index (RSI) crossing above the 60 mark which signals strength in momentum on the higher side.
“We recommend buying crude oil at the current price of Rs 6955 and adding on dips near Rs 6800 level for the target of Rs 7400 and further upside up to Rs 7500 level. If prices close below Rs 6580 level, the view will be invalidated,” industry executives said.
NYMEX Crude Oil has gained by more than 6% in the month of March 2024. The trend is expected to resume its upward trajectory towards the October 2023 high of $90 level.
On the daily chart, the 20-moving average has crossed over the 100 EMA (Exponential Moving Average), and the 14-period RSI has crossed above the 60 mark, all of which indicate a stronger upward momentum.
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