Crude oil output figures expected to drop; traders should go long around Rs 5800/bbl, target of Rs 6100/bbl
Crude price has been trading in the range of 5700-6100 for the past one week. Both bulls and bears are on even footing as OPEC+ production cut will tighten oil market in second half of the year while US debt ceiling and fall in demand anticipation is keeping prices under check. US inventory is also falling giving a boost to prices but the overhang of debt ceiling and Chinese weak factory data is keeping prices from rallying further on the upside.
There is positive news for crude which is that global oil demand reached its highest on record in March. Global oil demand was by 3 million barrels per day (bpd) in March compared to February and hitting the highest level on record. Global oil inventories also dropped in March, pointing to a tightening market ahead. However, prices have not reacted to this data because Chinese demand is due to import from Russia which is providing at discount and there are macroeconomic concerns that the world is heading into recession.
