MCX Crude Oil Price: Buy October futures for this target; analysts bullish on near term outlook amid supply constraints

Crude Oil Outlook:  The MCX October Crude Oil futures were trading with a positive bias on Monday. Around 1 pm, the Oil futures were trading at Rs 5520 per BBL and were up by Rs 53 or almost one per cent from the Friday closing price. 

Goldman Sachs raised its forecast for year-end Brent crude oil prices to USD 90 per barrel from USD 80, as a faster fuel demand recovery from Delta variant and Hurricane Ida’s hit to production led to tight global supplies, a Reuters report said. 

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Brent futures hit a near three-year high last week as global output disruptions have forced energy companies to pull large amounts of crude out of inventories, the report further said. 

"While we have long held a bullish oil view, the current global supply-demand deficit is larger than we expected, with the recovery in global demand from the Delta impact even faster than our above-consensus forecast and with global supply remaining short of our below consensus forecasts," Reuters report said quoting Goldman said in a note released on 26 September. 

Hurricane Ida and Nicholas, which swept through the US Gulf of Mexico earlier this month, damaged platforms, pipelines and processing hubs, shutting most offshore production for weeks.

On the demand side, Goldman said risks were "squarely" skewed to the upside in the winter, as a global gas shortage will increase oil-fired power generation. 

Expert Anuj Gupta, Vice President (VP), Commodity and Currency Research at IIFL Securities remains bullish on the outlook, expecting supply side constraints in the immediate to near term. 

Gupta recommends a buy at Rs 5380, with a stop loss at Rs 5280 while the stop loss at Rs 5550. 

A report by Motilal Oswal expects the Oil Futures to trade with a positive bias. The report puts the support in the range between Rs 5485 and Rs 5455 with resistance at Rs 5565-Rs 5600.  

It advises buy on dips near the support price which will negate below the support price. 

Brent Crude was trading at USD 78.03, up by over 1 per cent, while West Texas Intermediate (WTI) Crude was trading at USD 74.75, up almost 0.8 per cent around this time.       

Earlier this month, the Organization of the Petroleum Exporting Countries and allies, a group known as OPEC+, agreed to stick to its decision made in July to phase out record output cuts.

Hurricane Ida`s hit to supply has more than offset OPEC+`s production ramp-up since July with non-OPEC+ and non-shale production continuing to disappoint, Goldman said. 

The bank, however, flagged a potential new virus variant, which could weigh on demand and an aggressively faster ramp-up in OPEC+ production that may soften its projected deficit, as key risks to its bullish outlook, the report said.