Commodity Radar: Crude oil futures jump over 4% on MCX. Religare analyst sees 13% upside, suggests initiating long positions

Domestic crude oil prices surged over 4% on the MCX on Tuesday, hitting an intraday high of Rs 9,106 per barrel as the situation around the Iran-Israel-US conflict remains fluid. Now in its third week, the crisis has lifted global prices above the $102 per barrel mark, with concerns mounting that crude could spike to $150 in the coming weeks if de-escalation efforts fail and the Strait of Hormuz remains shut.

Brent prices have appreciated by over 35% this year so far.

The Strait of Hormuz, a 21-mile-wide waterway, remains a critical passage for global supply. It accounts for 20% of the world’s oil and liquefied natural gas flows.

Commenting on the fundamental trends, Ajit Mishra, Senior Vice President – Research at Religare Broking, said that the near-term outlook is dominated by extreme volatility due to the ongoing US/Israel-Iran conflict, as oil markets are highly sensitive to potential supply disruptions in the Strait of Hormuz.

“Crude oil prices have started appreciating ever since the Iran conflict escalated with the US and Israel. The upside momentum has eased of late as the IEA began releasing 400 million barrels of emergency oil reserves to stabilise supply amid ongoing regional conflicts. Having said that, unless oil tanker movements gather pace from the Hormuz region, the overall outlook shall remain positive for the oil market,” Mishra said.

Technical outlook

“Crude oil was seen trading in a narrow price band for months, and it was only during the first week of this month that it breached resistance barriers comfortably in line with the emergence of the US/Israel conflict with Iran. Crude oil had appreciated to 10,549 on MCX after closing above the strong resistance zone of 6,800-7,000,” the Religare analyst said.

MCX futures prices on the weekly chart remain above the key Exponential Moving Averages (EMA), signalling positive momentum ahead, Mishra said.

Crude oil trading strategy

Consider initiating long positions in the 8,600-8,800 zone, with a stop loss below 8,150 and a target of 9,900.

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(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)