Crudeoil On MCX Settled Down -3.75% - Ways2Capital

Crudeoil on MCX settled down -3.75% at 2873 hit by an unexpected large build in gasoline inventories and an international outlook that suggests a big increase in supply in the coming year. The news underscored the market's ongoing struggles with weak gasoline demand in the United States, the world's top consumer of the motor fuel, and rising production, especially from U.S. shale drillers.

Despite nearly six months of OPEC-led efforts to reduce a global glut, oil prices have not stabilized at higher levels as many had anticipated when the group agreed with other producers to cut supply back. At 242.4 million, U.S. gasoline inventories were 9 percent higher than the five-year average as demand was down 1.2 percent over the last four weeks when compared with a year ago, according to EIA.

The Organization of the Petroleum Exporting Countries and other exporters such as Russia have agreed to keep production almost 1.8 million barrels per day (bpd) below the levels pumped at the end of last year and not to increase output until the end of the first quarter of 2018. But adherence to the cuts is under scrutiny. The producer group said this week its output rose by 336,000 bpd in May to 32.14 million bpd. Nigeria and Libya are responsible for much of that rise, and they are exempt from cuts.

Technically market is under fresh selling as market has witnessed gain in open interest by 38.23% to settled at 23663 while prices down -112 rupees, now Crudeoil is getting support at 2829 and below same could see a test of 2786 level, And resistance is now likely to be seen at 2949, a move above could see prices testing 3026.

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Suhani Verma

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