News & Development Bollinger Band Retracement Levels Rising Channel Overall, we maintain our bullish view in MCX Crude Oil for the next one month.

Transcription

1 2 nd June 2018

2 News & Development MCX Crude Oil prices had witnessed a significant incline during the month of April owing to geopolitical tensions prevailing across the globe. MCX Crude futures further rose till 22 nd May, with production cut made by OPEC countries & Russia which led to supply tightness in the global markets. This eventually had an impact on the rupee with respect dollar, as demand in the Indian markets has remained steady during the above periods. Post 22 nd May, crude prices in global markets observed a decline with significant rise in US crude inventories reported on a weekly basis. Also higher refinery production reported in United States further pressurized prices in the global markets. By end of May month, MCX crude prices closed at Rs.4517/bbl, higher by 6.68% compared to 31 st March s closing of Rs.4234/bbl. For the month ahead, MCX crude prices may witness further correction before a bounce back, as United States is estimated to increase its refinery production. Currently refineries are functioning at 93.9% of their operating capacity and we expect refineries to function at 95-96% of its operating capacity in the coming weeks. Also higher inventories reported in US as compared to previous 2 months is expected to pressurize prices. As per latest EIA s weekly report ending 25th May, U.S. crude oil inventories reported at million barrels, higher by 2.16% compared million barrels reported on 30 th March As per latest sources, Saudi Arabia and Russia are discussing on raising OPEC and non-opec oil output by around 1 million barrels per day (bpd), easing 17 months of strict supply curbs amid concerns that a price rally has gone too far. The efforts taken are to cool the global market after Brent oil hit $80 a barrel on concerns over a supply shortage. However, this may bring global buying at lower levels which is expected to support prices. On the daily chart, NYMEX Crude Oil price has given a long correction from $72 to $65.50 in previous couple of days; which was the steamed downfall after a long bullish rally but overall prices are in bullish trend which suggests limited downside in the counter while price has found the support at rising trendline, which could be a reversal zone for near term. In addition, Price has also obtained the support at lower Bollinger Band and 50% Retracement Levels which act as immediate support level and reinforce bullish sentiments. Moreover, price has sustained at 100 days SMA on daily chart; which indicate support zone for medium term. On the other hand, MCX Crude Oil price has also been hovering in Rising Channel formation; where price has found the support of 50 days DEMA on daily chart. A momentum indicator RSI (14) reading is at 53 levels as well as stabled at lower trendline support. For short term perspective, one can initiate a long position in MCX Crude Oil (July) at CMP Rs or on fall in the prices till Rs should be used as buying opportunity for an upside target of Rs levels. However, the bullish view can be reversed if MCX Crude Oil (July) close below the support of Rs Overall, we maintain our bullish view in MCX Crude Oil for the next one month.

3 News & Development Refined Soy Oil spot price has witnessed a gradual decline of -3.84% since 2 nd April and closed at Rs.750/ 10 kg by 29 th May. Lower buying by traders in the markets brought downtrend in future prices. Also falling rupee price owing to rise in Crude prices in the international markets, led to lower imports/ demand for soy oil in the Indian markets. As per SEA of India (Solvent Extraction Association of India), imports for Apr 18 has reported at metric tonnes, lower by 9.68% compared to Apr 17 imports of metric tonnes. Looking forward for the coming month, we are estimating refined soy oil futures to trade further lower with expectancy of normal monsoon in India. Normal monsoon is projected to bring rise in acreage of soybean sowing in the major states of Madhya Pradesh, Maharashtra & Rajasthan. Farmers majorly from Maharashtra Vidharbha regions are likely to shift acreage from cotton to soybean, as soybean is offering relatively better prices in the markets. Refined Soy Oil which is produced after crushing soybean, is likely to feel similar pressure in the near term. The domestic buyers have switched to buying sunflower oil over soy oil due to lower price availability, which has further reduced the demand in the markets. Along with Crude Palm Oil, market players were expecting higher duties to be imposed on soy oil, but the same has not been witnessed which is also easing the prices in the domestic markets. On the international level, weekly USDA crop progress report released on 29th of May showcases that soybeans planting area has reported at 77%, which is up from 65% from the corresponding period last year and higher compared to the 5 year average of 62%. Hence, we expect bearish trend in NCDEX Soy oil Futures for the coming month. On a daily chart, NCDEX Refined Soya Oil future has given Rising Channel formation breakdown and sustained below it which indicates a bearish move in the price. On a weekly chart, it has formed doji formation at higher levels in previous week and given the bearish confirmation in recent week candle as price has breached the previous week low of Rs and settled down below that level in June contract. Moreover, price has moved below 50 days SMA on the daily chart which signifies negative sentiments in the counter. A daily momentum indicator RSI reading is at 46 levels with a negative crossover which points out for a negative breath in the counter. For short term perspective, one can initiate short position in NCDEX Refined Soya Oil (July) at CMP 772 or on rise in prices till 780 levels can be used as selling opportunity for the downside target of Rs 730. However, reversal in the bearish view can be seen if RSO price sustains above the resistance of Rs. 796 level. Overall, we maintain our bearish view in Refined Soya Oil for one to two months. SEBI Registered Research Analyst * Please Refer Disclaimer on Website

4 Commodity LTP WoW (%) MoM (%) Open Interest (weekly) NYMEX Crude Oil ($/bbl) K Brent Crude Oil ($/bbl) MCX Crude Oil (Rs./bbl) NCDEX Refined Soy Oil (Rs./ 10 kg) US Crude Oil Inventories Seasonality Chart Commodity Country Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec SOYBEAN India USA Brazil Argentina China Sowing Growth Harvesting/ Arrivals SEBI Registered Research Analyst * Please Refer Disclaimer on Website

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