Crude Mood: Outlook Strong, says IIFL analyst – Buy MCX October oil futures for this target

Oil and natural gas continue to gain traction on India’s largest commodity exchange – Multi Commodity Exchange of India. The October Crude Oil and Natural Gas were trading with a positive bias towards the end of the first session. As we head to the next session in some time, this is what the traders must do with the crude oil futures, to maximise gains. 

The outlook remains strong for crude oil and natural gas, analyst Anuj Gupta said. Gupta, who is Vice President (VP), Commodity and Currency Research at IIFL Securities said that brent crude could test USD 90 over the next 8-10 weeks. Meanwhile, natural gas could reach targets around USD 7. On the MCX, it may cross Rs 500 per mmBtu, he added 

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The October Crude Oil futures were trading at Rs 6124 per BBL, up 1 per cent or Rs 62 from the Wednesday closing price. 

Brokerage firm Motilal Oswal expects Crude Oil futures to trade in a range. It puts support between Rs 6025 and Rs 5980. The resistance is in the range between Rs 6105 and Rs 6140.  

Likewise, it expects Natural gas to trade in a range as well. It puts resistance between Rs 433 and Rs 437 mmBtu while the support between Rs 426 and Rs 423. The MCX Natural Gas October futures were trading at Rs 431 per mmBtu, up 3.2 per cent or Rs 13.50. 

Gupta recommends a buy on MCX October crude oil futures at Rs 6070 with a stop loss of Rs 6000 while the target price of Rs 6250.  

Oil prices climbed on Thursday, reversing previous losses, as a bigger-than-expected draw in U.S. gasoline and distillate stocks prompted buying, a Reuter report said. 

The uptick was also supported by expectations that soaring natural gas prices as winter approaches will drive a switch to oil to meet heating demand, it said. 

Brent crude futures gained 67 cents, or 0.8 per cent, to USD 83.85 a barrel at 0647 GMT (1217 PM IST) after falling 0.3% on Wednesday. 

Outlook 

The oil market continues to face uncertainties stemming from the COVID-19 pandemic, another Reuters report said quoting OPEC Secretary General Mohammad Barkindo.  

"The market is taking its course in accordance with supply and demand fundamentals. But we must admit there are external factors that are influencing the evolution of the market," he said.
Regarding how COVID-19 is creating uncertainty Barkindo pointed to "responses by the governments as the various variants, mutations emerge and how the world is able to upscale the vaccination rates in particular in developing countries".  

Natural Gas Storage data and Crude Oil Inventories data from is expected later in the day and traders must keep an eye on it. 

The commodities markets will remain closed for the first session on Friday on account of  Dussehra Holiday. It will reopen at 5 pm for the evening session.