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After being stuck in a narrow range above ₹3,500 per barrel for almost three months, the MCX-Crude oil futures contract slumped, breaking below ₹3,500 last month. A surge in US oil inventories triggered this fall. The contract plummeted over 13 per cent to record an intra-month low of ₹3,076. After consolidating around this low for about two weeks, it has bounced back in the last week of the month. Technically, this bounce is very significant as it has happened from a key trendline support around ₹3,100. This gives an initial sign that the down-move that dragged the contract below ₹3,500 could have ended. If the contract manages to sustain above ₹3,200 in the coming days, the downside pressure will ease and it can rise to ₹3,450 and ₹3,500 levels once again. Inability to break above ₹3,500 may trigger a pull-back move to ₹3,250 or ₹3,200. In such a scenario, the contract may remain range-bound between ₹3,200 and ₹3,500. But if the MCX-Crude oil contract manages to surpass the hurdle at ₹3,500 decisively, it can extend its rally to revisit ₹3,700 and ₹3,750 levels thereafter.
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