Following Russia’s invasion of Ukraine, Brent crude has surpassed $90 on the downside for the first time in eight months. Brent was trading at roughly $90 in February when Russia invaded Ukraine, and then prices soared as hostilities grew more intense. Since OPEC+ wants to maintain prices high and recession fears are rising, the cartel may be obliged to implement yet another output cut.
Due to the group’s underproduction, OPEC+ this week reduced its performance target by 100,000 bpd. Chinese oil imports have been falling, and the country is locking down cities, which is reducing demand from Asia’s biggest consumer of crude oil. Add to this the anticipated impending recession in significant European economies, which will be brought on by the energy crisis and sky-high prices as well as the aggressive interest rate hikes from central banks, including the Fed.
Prices in MCX still have room for correction. The momentum oscillator RSI 14 is currently at 38 and historically over the past two years, it has fluctuated between 33 and 31 levels. Therefore, one can anticipate any short covering in the September contract between levels of 6400 and 6300. Support on the downside lies between 6400 and 6300, while resistance is at 7200. For the coming week, wait around the levels of 6400–6300, from which one can buy with a goal of 6800–7000 and a stop loss of 6200.