Crude Oil on MCX settled up 3.04% at 3046 after the government said U.S. oil inventories plunged last week. The US EIA reported a 6.2mbl decline in weekly crude inventories, confirming a similr reading from the American Petroleum Institute yesterday. US WTI crude oil traded $45.59 per barrel gained as much as 3 percent after the U.S. EIA surprised the market with a 6.2 million barrel fall in crude oil inventories last week to 504.6 million barrels. While crude oil prices have shown some gains recently, Wednesday’s announcement from the Federal Reserve’s Open Market Committee (FOMC) and next week’s expected informal meeting of OPEC and Russian producers are the near-term drivers of crude prices.
The Bank of Japan has already bumped crude prices up 2% after announcing further economic stimulus, and if the Fed leaves its policy rate unchanged that will add a second boost to crude prices. A potential agreement among producing nations will extend no further than a production freeze at near-record high levels.
After an initial burst of enthusiasm from traders that could push crude to north of $50 a barrel, prices are more likely to revert to recent levels between about $44 and $48 a barrel. Commercial inventories remain very high and only a production cut will have any impact on reducing the glut. That does not appear to be part of the current discussion.
Now Investors remain hopeful that major producers will be able to agree to an output freeze next week. Technically market is under short covering as market has witnessed drop in open interest by -28.27% to settled at 18245, now Crude Oil is getting support at 2987 and below same could see a test of 2927 level, and resistance is now likely to be seen at 3085, a move above could see prices testing 3123.
--Crude Oil trading range for the day is 2927-3123.
--Crude Oil prices gained after data showed that oil supplies in the U.S. unexpectedly fell.
--The U.S. Energy Information Administration said in its weekly report that crude oil inventories fell by 6.2 million barrels in the week ended September 16.
--Supplies at Cushing, Oklahoma, the key delivery point for Nymex crude, rose by 0.526 million barrels last week, the EIA said.
Courtesy: Kedia Commodities