Crude Oil Prices Plummet, Uncertainty Reigns Over Future Trend
Crude oil prices took a hit last week, ending a three-week rally. Brent crude futures on the Intercontinental Exchange (ICE) and domestic market crude oil futures lost 9.1% and 5.7%, respectively.
The Brent futures price is currently above the key support level of $84.75, where both the 21- and 50-day moving averages coincide. This could potentially lead to a recovery, possibly reaching $97 in the near term. A breakout of $97 could lift prices to $100, but if it drops below $84.75, it may fall to $75.
In the domestic market, crude oil futures (Aug) began last Monday's session with a gap-down, hitting a low of ₹7,464 on Tuesday before recovering to ₹8,113. Despite the selling pressure, the contract remains above the base at ₹8,000 and the support at ₹7,500, suggesting a possible rally to ₹9,000.
However, if it declines and breaches the support at ₹7,500, the outlook may turn bearish, leading to a fall to ₹7,000 and subsequently to ₹6,500. For traders with high risk tolerance, shorting crude oil futures below ₹7,500 is suggested, with a target of ₹6,500 and stop-loss of ₹8,050.