Crude oil futures slip nearly 1%, WTI trades below $41 a barrel

Crude oil futures declined to Rs 3,060 per barrel on July 16 as participants increased their short position as seen by the open interest. Crude oil slipped after OPEC+ decision to taper down production cut to 7.7 million barrels per day from 9.7 Mbpd in August despite Energy Information Administration (EIA) data showed a sharp drawdown in US crude stock.

The US EIA reported that US crude inventories fell by 7.5 million barrels for the week ended July 10.

Tapan Patel, Senior Analyst (Commodities), HDFC Securities, said crude oil prices gained above $41 on bullish weekly inventory data after a US EIA report showed that inventories fell by 7.5 mb for the week ending July 10. Crude oil prices also jumped after an OPEC and EIA report showed improved oil demand.

Crude oil prices eased after OPEC plus nations announced ease in output cut to 7.7 mb per day from August until December from current levels of 9.7 mb per day.

“NYMEX crude trades weaker today near $40.72/bbl, a fall of more than 1 percent from the previous close. The scale-back of production cuts by OPEC + for August and September to 7.7 million bpd has triggered some profit booking. However, demand recovery from the US as indicated by the drop in inventories has supported the prices,” said Ravindra Rao, VP- Head Commodity Research at Kotak Securities.

In the futures market, crude oil for July delivery touched an intraday high of Rs 3,084 and an intraday low of Rs 3,058 per barrel on MCX. So far, in the current series, black gold has touched a low of Rs 1,655 and a high of Rs 3,153.

Crude oil delivery for July slipped Rs 29, or 0.94 percent to Rs 3,065 per barrel at 15:11 hours IST with a business turnover of 4,833 lots.

Crude oil delivery for August edged lower by Rs 28, or 0.90 percent, to Rs 3,088 per barrel with a business volume of 296 lots.

The value of July and August's contracts traded so far is Rs 722.41 crore and Rs 9.83 crore, respectively.

Patel expects oil prices to trade down for the day with support at $39 and resistance at $42. MCX Crude oil July futures have support at Rs 2,970 with resistance at Rs 3,150.

West Texas Intermediate crude slipped 1.12 percent to $40.74 per barrel, while Brent crude, the London-based international benchmark, was down 0.69 percent to $43.49 per barrel.

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