Crude oil is expected to remain under pressure on back of escalating US-China trade war and rising US oil inventories. The oil markets continued to hit hard by the increased tension in the US-China trade war, which has made investors increasingly worried about the state of the global economy and, by extension, the outlook for global oil demand growth for the rest of the year.
Oil prices tumbled last week supported by surging US crude inventories and weak demand from refineries. Last week, the Brent crude oil lost 6.5 percent, falling below $70 per barrel to end the week at $67.47 per barrel on May 24.
Commercial US crude inventories rose 4.7 million barrels in the week ended May 17, to 476.8 million barrels, their highest since July 2017, the EIA data showed.
On the other hand, one can’t ignore the political tension building in middle-east between the United States and Iran, as well as ongoing supply cuts led by the organisation of the petroleum exporting countries (OPEC) that started in January 2019 to prop up the market.
Outlook
Looking ahead, the next trigger points from oil will be next week’s inventories from the US and any escalation of trade tensions between the US and China. Investors will also watch out for compliance from OPEC and its members. Saudi Arabia reiterated it would aim to keep the market balanced and try to reduce tensions in the middle-east.
For the next week, we expect Brent July 2019 contract on ICE could remain within the range from $66-70/barrel. NYMEX June 2019 contract could remain between $55-60/barrel. MCX Crude May 2019 contract could trade in a range from Rs 3,900-4,250.
Strategy for the week
We recommend investors to sell MCX Crude June 2019 contract in the range of Rs 4,140-4,150 with a stop loss of Rs 4,250 and a target price of Rs 3,900.
On the other hand, one can’t ignore the political tension building in middle-east between the United States and Iran, as well as ongoing supply cuts led by the organisation of the petroleum exporting countries (OPEC) that started in January 2019 to prop up the market.
Outlook
Looking ahead, the next trigger points from oil will be next week’s inventories from the US and any escalation of trade tensions between the US and China. Investors will also watch out for compliance from OPEC and its members. Saudi Arabia reiterated it would aim to keep the market balanced and try to reduce tensions in the middle-east.
For the next week, we expect Brent July 2019 contract on ICE could remain within the range from $66-70/barrel. NYMEX June 2019 contract could remain between $55-60/barrel. MCX Crude May 2019 contract could trade in a range from Rs 3,900-4,250.
Strategy for the week
We recommend investors to sell MCX Crude June 2019 contract in the range of Rs 4,140-4,150 with a stop loss of Rs 4,250 and a target price of Rs 3,900.
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