Crude oil price: OPEC+ has agreed to raise supply by 20 lakh barrels per day by end-CY21 and extend their overall agreement until end-CY22
Crude oil price is expected to remain bearish for the next few trade sessions as OPEC+ countries have agreed to raise supply by 20 lakh barrel per day. Rising concern of thirds wave of Covid-19 is further expected to put breaks on the crude oil price rally in the global commodity markets. According to MCX futures experts, overall outlook for crude oil price is bearish and they advised commodity traders to maintain 'sell on rise' strategy till next trigger.
Speaking on the reason for bearish crude oil price outlook Sumit Pokharna, vice-president at Kotak Securities said, "Recently, OPEC+ has agreed to raise supply by 20 lakh barrels per day by end-CY21 and extend their overall agreement until end-CY22, while allowing for higher baseline capacity for key nations from May 2022. We believe this arrangement may provide near-term relief to the tight oil markets amid ongoing recovery in demand and curtailed supplies. With increment oil supply support, oil prices will be at steadier levels, we opine."
Sumit Pokharna of Kotak Securities went on to add that the extension will enable the OPEC+ countries to manage their supplies in scenarios of volatility in demand due to Covid-19, ramp-up in production from Iran, if sanctions are lifted and increase in production from the US with higher crude prices.
Advising 'sell on rise' strategy to the commodity future traders Anuj Gupta, Vice President — Commodities & Currency Trade at IIFL Securities said, "Overall outlook for crude oil is bearish and any rise in the future oil price should be seen as an opportunity to sell. One should sell crude oil at ₹5,300 per barrel at Multi Commodity Exchange (MCX) for the immediate short-term targets of ₹4,900 per barrel and ₹4,700 per barrel. However, one must maintain the stop loss at ₹5,450 while taking this sell position in crude oil future."
At MCX, Re 1 change in crude oil price leads to ₹100 change in one's portfolio as lot size of crude oil at MCX is 100 barrel. In the case of target trigger, one gains ₹100 per Re 1 change while in the case of stop loss trigger; the trader incurs loss of ₹100 per Re 1 change.