Crudeoil On MCX Settled Up 1.43% - Ways2Capital

Crudeoil on MCX settled up 1.43% at 3259 prices edged higher on Monday advanced rebounding sharply since Friday, following a tumble on Thursday. Despite OPEC extending its output cut for an additional 9-months until March 2018, the markets sold off, as some expected more for the cartel. Support also seen as Hedge fund traders exited short position in futures and options ahead of Thursday’s drop, and going forward traders will also need to focus on the dollar, which will also experience volatility given the a Federal Reserve monetary policy meeting and an ECB meeting on June 8.

Ahead of the OPEC meeting, traders appear to have squared up positions, taking more short position off the table than long position in futures and options. According to the latest commitment of trader’s report released for the date ending May 23, 2017, managed money reduced short position in futures and options by 44K contracts, a decline in this category of 27%, dropping the open interest in short position down to 117K contracts.

OPEC has opened the door for U.S. producers who continue to increase production, and with prices hovering near the $50 handle there is a lot of money to be made. While Rig counts continue to rise which reflects increasing future production. Baker-Hughes reported a two oil rig increase in the latest week, bringing the total to 722, and up from 406 a year ago. Technically market is getting support at 3214 and below same could see a test of 3170 level, And resistance is now likely to be seen at 3286, a move above could see prices testing 3314.

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Suhani Verma

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