MCX crude near its resistance zone; OPEC lifts its crude oil demand forecast for 2023 to 2.4 million bpd By Bhavik Patel Oil bulls are back with a bang as the market sentiment has shifted to positive note with inflation in the U.S. slowing dramatically and markets tightening on the back of supply disruptions and production cuts. Until now, the market was only looking at the consumption side but now concerns are emerging regarding the supply side. Oil production has been stopped at Libya’s 70,000 b/d El Feel oilfield on Thursday after tribal protests over the kidnapping of a former finance minister grew into larger unrest that could soon impact the adjacent El Sharara field. Demand side is also expected to be stable as according to OPEC reports, OPEC has lifted its crude oil demand forecast for 2023, to 2.4 million barrels per day (bpd), according to the group’s latest Monthly Oil Market Report (MOMR) released on Thursday. OPEC’s expectation for this year’s oil demand is an upward revision of 100,000 bpd from last month’s forecast. We had also previously reiterated that there is disparity between prices and fundamentals where the market is clearly looking on the consumption side anticipating that demand will weaken due to recession fears but demand till date is strong from Asia. Now OPEC has also acknowledged that we may see a soft landing in the US and no chance of recession in 2023. Both supply constraint and steady demand had led to recovery in oil prices. In MCX, crude is now near its resistance zone. We have seen since July 2022 that crude prices have failed to clear the 200-day moving average. It has faced resistance multiple times and been corrected. Now once again it is near its 200-day moving average on a daily scale and so we expect correction from the current juncture. Correction is also due as we have seen non-stop rally in crude for the past 7 trading sessions so both price-action wise and hurdle of the 200-day moving average suggest pullback from prices. 6050 is the support zone where one can initiate a long position with expected price of 6300 and stoploss of 5900. Anyone who has taken a long position can book profit and wait for corrections to take a fresh long position. (Bhavik Patel- Commodity and currency analyst at Tradebull Securities. Views expressed are the author’s own. Please consult your financial advisor before investing.)
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