Crude oil prices were consolidating over the last week. The prices tumbled over 3 per cent on August 1. The Crude Oil futures contract traded on the New York Mercantile Exchange (NYMEX) slumped 3.5 per cent to a low of $48.4 per barrel on that day. However, the contract found strong support near $48.5 and has been sustaining above this level since then. It is currently trading at $49.5 per barrel.

On the domestic front, the Crude Oil futures contract on the Multi Commodity Exchange (MCX) fell sharply from a high of around ₹3,234 per barrel to a low of around ₹3,100 on August 1. The contract has been stuck between ₹3,100 and ₹3,200 since then and is currently trading at ₹3,158 per barrel.

Outlook

The price action on the chart reveals a bullish picture for crude oil prices. The sideways consolidation over the last week suggests that oil lacks fresh sellers to extend the sharp fall witnessed on August 1. Strong support is in the $48.35-$48 zone. Resistance is at $50.5.

A strong break above this hurdle will boost the momentum. Such a break can take the contract higher to $52 initially. A further break above $52 will increase the likelihood of the contract extending its rally to revisit $54 levels.

The outlook will turn negative only if the NYMEX-Crude oil falls below $48. The next target is $47. A further fall below $47 can drag the prices lower to $45 thereafter.

On the domestic front, the MCX-Crude Oil contract is getting strong support at ₹3,100. A rise to ₹3,250 looks likely as long as the contract trades above ₹3,100. A further break above ₹3,250 will increase the possibility of the contract extending its rally to ₹3,450 or even ₹3,500.

The outlook will turn negative if the contract breaks below ₹3,100. Such a break can take it lower to ₹3,000 or even ₹2,900.

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