Crudeoil On MCX Settled Up 0.14%

Crudeoil on MCX settled up 0.14% at 2877 while prices still continued to sustained below $45 mark although the pace of the collapse slowed, as traders continued to assess yesterday's Fed announcement. In a surprisingly hawkish move that strengthened the U.S. dollar and dented commodity prices, the Fed maintained its interest rate outlook for the next two years despite downbeat economic data. Meanwhile, OPEC is worried that global supplies will continued to outstrip demand.

Yesterday, the cartel said it estimates that US crude oil production will rise by 800,000 bpd in 2017. Only six months ago, OPEC said U.S. production was going to fall in 2017. Crude has remained firmly on the defensive since Wednesday’s inventories data with further concerns surrounding underlying over-supply as US output continues to increase.

The EIA said Wednesday that gasoline inventories, one of the products that crude is refined into, unexpectedly rose by roughly 2m barrels against expectations for a decline of 457,000 barrels. The bearish inventory report added to the current negative sentiment on oil, after the IEA said Wednesday that non-Opec output was set to increase over the near term. "For total non-Opec production, we expect production to grow by 700,000 bpd this year, but our first outlook for 2018 makes sobering reading for those producers looking to restrain supply," the IEA said in its monthly oil market report.

Rising non-Opec output has dented Opec and its allies’ global pact to reduce oversupply in the market, which has pressured prices for nearly three years. Technically market is under short covering getting support at 2858 and below same could see a test of 2840 level, And resistance is now likely to be seen at 2894, a move above could see prices testing 2912.

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Suhani Verma

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