MCX Crude Oil futures may drop to Rs 7,100; Natural Gas in oversold zone

The MCX Crude Oil has near support at Rs 7,740, below which it can slide towards the 200-DMA at Rs 7,100. Natural Gas may test Rs 410-odd level, while a bounce to Rs 500-odd level cannot be ruled out.

Crude Oil prices tumbled over 10 per cent in trades on Tuesday amid fears of a slowdown in demand for petroleum products as worries over a US recession mounted.

Brent Crude oil dipped to $101.14 a barrel, and was down a whopping 27.3 per cent from its March high of $139 a barrel. Meanwhile, WTI Crude sank to a low of $97.47 a barrel in intra-day trades on Tuesday, down as much as 25.3 per cent from its peak of $131 a barrel. READ MORE

Despite the sharp fall in Crude Oil prices, Brent and WTI Crude were still up a solid 34 per cent and 32.7 per cent, respectively, on the year-to-date (YTD) basis.

Similarly, the MCX Crude Oil futures for July delivery nose-dived nearly 11 per cent in late trades on Tuesday to a low of Rs 7,733. MCX Crude Oil futures have corrected sharply by 22.6 per cent from its all-time high of Rs 9,966 registered on March 08, 2022. However, MCX Crude Oil futures were up a strong 38.2 per cent on a YTD basis.

The relative outperformance by MCX Crude compared to the global benchmark oil prices can be attributed to the fall in Indian Rupee versus the greenback. 

Further, Natural Gas futures too declined over 6 per cent in trades on Tuesday. The Natural Gas futures have cracked a whopping 42 per cent from its peak, but still command a gain of 57.3 per cent on a YTD basis.

Going ahead, here's how the energy-based commodities are placed on the charts: 

Crude Oil

Bias: Wait and Watch

Last Close: Rs 7,775

Resistance: Rs 8,235, Rs 8,300

Support: Rs 7,740

Downside Target: Rs 7,100

Despite the sharp correction, the bias for MCX Crude Oil remains positive on the price-to-moving averages action, both on the daily and weekly charts. However, the 20-DMA (Daily Moving Average) at Rs 8,710 is seen converging with the 50-DMA placed at Rs 8,640. As and when the 20-DMA dips below the 50-DMA, the short-term trend shall turn cautious.

Meanwhile, the MCX Crude Oil futures were seen testing support at its lower-end of the Bollinger Band on the daily chat at Rs 7,740-odd level. On the weekly chart, the MCX Crude Oil futures have slipped below the 20-WMA (intra-week). Since late December, it has been observed that Crude Oil futures have managed to sustain above the 20-WMA on a weekly closing basis. 

The daily chart indicates that sustained trade below Rs 7,740, can trigger a slide to Rs 7,100-level, which is where its 200-DMA stands. On the upside, the commodity is likely to face resistance around its 100-DMA and 20-WMA at Rs 8,235 and Rs 8,300, respectively. 

Accordingly to the weekly Fibonacci chart, the bias for the remainder of the week is likely to remain bearish as long as MCX Crude Oil July futures trade below Rs 8,135, above which the next significant hurdles will be at Rs 8,310 and Rs 8,430. 

On the downside, the commodity could seek support around Rs 7,550 and Rs 7,355, as indicated by the monthly Fibonacci chart.

On Wednesday, the MCX Crude Oil July futures are likely to trade in a broad range of Rs 7,150 to Rs 8,400, with support expected around Rs 7,550 - Rs 7,390 - 7,270; whereas resistance on the upside seems likely around Rs 8,000 - 8,160 - 8,280. 

Natural Gas

Bias: Negative

Last close: Rs 529

Support: Rs 502, Rs 430

Resistance: 607

The MCX Natural Gas futures are seen testing support around its 200-DMA for the last five trading sessions. While the short-term trend is negative, select key momentum oscillators have hit the oversold territory and showing some signs of consolidation.

As long as the commodity manages to sustain above Rs 430-level on a closing basis, a sharp pull-back to Rs 505-odd level - its 100-DMA cannot be ruled out.

Among the key momentum oscillators the 14-day RSI (Relative Strength Index) is in oversold zone, while the MACD (Moving Average Convergence-Divergence) and the Slow Stochastic are showing some signs of consolidation.

As per the weekly chart, the next significant support for Natural Gas futures is at Rs 410 - its 50-WMA, below which a sharp fall to Rs 300-odd levels seems possible. On the upside, the commodity has near resistance around Rs 510 - its 20-WMA.

As per the weekly Fibonacci chart, the MCX Natural Gas July futures seem likely to test the support at Rs 410-level, as long as the commodity trades below Rs 449. The next major weekly supports are seen at Rs 400 and Rs 389.

On Wednesday, as per the daily Fibonacci chart, MCX Natural Gas July futures are likely to seek support around Rs 427 - 421 - 412. On the upside, the commodity is likely to face resistance around Rs 449 - 453 - 458.