IGI Logo

CRUDE OIL MONTHLY MANTHAN

Summary

In January, crude oil prices on MCX surged by 5.09%, marking the first monthly gain since September. Escalating Middle East conflicts heightened supply concerns, contributing to the uptrend. The IMF upgraded global economic growth projections, emphasizing a "soft landing" for the US and China. Despite positive indicators, China's contracting manufacturing activity and concerns about its economic slowdown impacted sentiment. OPEC anticipated oil demand growth driven by Chinese consumption, but signs of a slowing economy tempered outlooks. Geopolitical tensions, including the Israel-Hamas war and Red Sea conflicts, influenced oil benchmarks, yet actual output remained unaffected. Mixed US inventory data added complexity, with crude stockpiles decreasing and gasoline inventories increasing.

Conclusion

Conclusion

In February, crude oil prices are likely to face a complex landscape influenced by a combination of geopolitical tensions and economic indicators. The ongoing conflicts in the Middle East, particularly the naval confrontation in the Red Sea, have disrupted shipping routes, impacting oil and natural gas transportation. Despite these geopolitical concerns, actual output has not been significantly affected.

The technical outlook suggests a cautious approach, with crude oil prices experiencing a decline and testing key support levels. The breach below the 200-day Simple Moving Average (SMA) and the critical 6600 level indicates a potential shift in sentiment. The 50-day SMA around 6320 and 6220 emerges as crucial support, with a rounding bottom pattern forming on the daily chart.

Traders should remain vigilant and employ a Buy-on-Dip strategy, considering supply concerns and geopolitical tensions. The positive upside momentum, despite a temporary setback, suggests potential resilience. However, a sustained break below 6220 could signal further downside risks. The market's reaction to economic indicators, especially China's manufacturing activity, will play a pivotal role in shaping crude oil prices in February. Overall, a nuanced approach balancing technical indicators and geopolitical factors is advisable for navigating the volatile landscape.

Above views are of the author and not of the website kindly read disclaimer