Weekly Outlook on Crude Oil - 7 Jul 2023

Crude oil prices inched up slightly on Friday but were on track for second straight weekly gains amid signs of tighter supply and improving demand. According to The Energy Information Administration, U.S. crude stocks drew more than expected on strong refining demand, while gasoline inventories posted a large draw after an increase in driving last week.

The draw in U.S. inventories also comes after Saudi Arabia said it will maintain a 1 million barrels per day (bpd) supply cut until August-end, and potentially later. The production cut went into effect from the beginning of July. Russia also said it will cut its oil exports by 500,000 bpd in August.

However, weaker-than-expected economic readings from China raised concerns over whether the country will be able to drive a recovery in oil demand this year. On the other hand, fear of rising U.S. interest rates may keep the gains limited.

On the daily chart, WTI crude oil prices pulled up from the immediate support at $66 and settled above the $70 mark. Prices have also been sustained above 50 days Simple Moving Averages with positive crossover in the momentum indicator RSI. Another indicator, CCI, added a positive basis for the near term. On the downside, the prices are holding support around $66.50 levels, while on the upside, key resistance is at around $80/84 levels.

MCX Crude oil prices witnessed upside moves consecutively for the second week in a row. On a weekly timeframe, the price took support at the lower line of the Symmetrical Triangle pattern and reversed further. RSI indicated positive crossover and supported the up-move. However, the prices are still trading below 100-days EMA, which stood at around 6070 and indicates an immediate hurdle for the uptrend. If the price manages to sustain above the 6070 mark, then further upside moves can be seen till 6200 and 6350 levels.

Hence, traders are advised to follow the buy on dips strategy and book partial profit around 6050 levels, a rest position can hold with trail SL to cost and once the price sustains above 6070 on closing basis can add more position for the next target of 6200 in the coming weeks.                

Important Key Levels: