MCX Crude Oil under short covering; Support seen at 3732

Technically Crude Oil market is under short covering as market has witnessed drop in open interest by 8.5% to settled at 10488 while prices up 63 rupees.

Now MCX Crude Oil is getting support at 3732 and below same could see a test of 3683 level, And resistance is now likely to be seen at 3827, a move above could see prices testing 3873.

Crude Oil on MCX settled up 1.69% at 3782 amid OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela, although surging U.S. output and concerns over economic growth to keep markets in check.

The ongoing closure of parts of the Keystone pipeline that brings Canadian oil into the United States also helped prop up prices. Prices were supported by hopes that crude demand might rise if a trade war between the U.S. and China was resolved by trade talks.

Markets are tightening amid voluntary production cuts led by the Organization of the Petroleum Exporting Countries (OPEC) and because of U.S. sanctions on Venezuela and Iran. Traders are bracing for increasing supplies at Cushing, Oklahoma, the delivery point for benchmark U.S. crude futures, as refinery outages could create a supply backlog that will add to inventories that are already at the highest in more than a year.

Refining profits for gasoline have plunged since mid-2018, going negative in Asia and Europe, amid tepid demand growth and a surge in supply. Hedge funds and other money managers cut their bullish U.S. crude positions in the week to Jan. 8, the U.S. Commodity Futures Trading Commission (CFTC) said. The speculator group cut its combined futures and options position in New York and London by 36,187 contracts to 85,150 during the period.

Trading Ideas:
–Crude Oil trading range for the day is 3683-3873.
–Crude Oil gained amid OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela.
–The ongoing closure of parts of the Keystone pipeline that brings Canadian oil into the United States also helped prop up.
–Markets are tightening amid voluntary production cuts led by the OPEC and because of U.S. sanctions on Venezuela and Iran.

Courtesy: Kedia Commodities