Mixed signals in the crude oil market- Analysts recommend ‘Buy on Dips’

By Bhavik Patel

Oil prices continued their sideways journey, with some bullishness emerging from weak US retail sales swiftly quashed by new escalation in the Middle East, with Israel attacking Rafah and the Houthis expected to retaliate soon. Though there are rumblings in the market that OPEC+ members appear to be ignoring their 2024 production cuts, Brent has not yet moved from its current lingering point around $82 per barrel.

Further positive news for crude was decrease in production from Iraq. Iraq’s oil ministry declared that it will make up for its January boost in crude production over the course of the following four months. According to secondary sources from OPEC, the Middle Eastern nation’s output was 4.19 million barrels per day, or about 190,000 barrels per day more than expected.

Also Read

GPT Healthcare sets IPO price band at Rs 177-186/ share 

In the short term, OPEC sees oil demand growth of 4.7 million bpd over the two years 2023 and 2024 combined. In the long term, OPEC sees robust demand and raised significantly its long-term estimate in its latest annual World Oil Outlook, with global oil demand seen at around 116 million bpd in 2045, up by 6 million bpd compared to the previous assessment from 2022.

WhatsApp Business updates policy to allow real money gaming ads in India AI powered content marketing: Revolutionising content marketing, but at what cost? Underlying resiliency of HDFC twins remains intact: CEO Amazon Great Freedom Festival 2024: Top deals on premium phones including iPhone 13, Samsung Galaxy S23, iQOO 12 5G and more

The rally in crude oil prices for the moment is halted because of rise in US inventories. U.S. Energy Information Administration reported an estimated inventory increase of 12 million barrels for the week to February 9. The change compared with a build of 5.5 million barrels for the previous week. The reason behind this build up of inventories is the closure of BP’s Whiting refinery. The refinery runs has been at 2020 lows so that is why crude inventory has increased and this will be temporary once refinery starts.

Also Read

ITC around 10-month lows but analysts still remain bullish: Here’s why

In MCX, crude has resistance in the zone of 6550-6600. Any dips is buying opportunity looking at strong fundamentals with any major breakdown only expected below levels of 6200. So buy on dips is recommended near 6350 with expected upside of 6550 and stoploss of 6200 closing basis.

(Bhavik Patel is a commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)

Related Posts