Bias for MCX Crude Oil seems positive, Natural Gas may remain volatile

The key support levels for the MCX Crude Oil and Natural Gas futures for the remainder of the week are Rs 8,545 and Rs 502.30, respectively.

The MCX Crude Oil futures have soared over 5 per cent in the first two trading sessions of this week tracking gains in the global benchmark oil prices, as major oil producers around the world announced that their production capacity reached or were within maximum limit.

Meanwhile, Natural Gas futures also staged a partial comeback with a gain of 13 per cent following a steep 37 per cent fall from its high of Rs 749.60 earlier this month.

Here's how these energy-based commodities could perform on Wednesday and the week ahead:

Crude Oil

Bias: Positive

Last close: Rs 8,833

Support: Rs 8,545

Upside Target: Rs 8,960

Following last week's sudden dip to below Rs 8,000-mark, the MCX Crude Oil futures were seen bouncing back, as the commodity seems to have taken support at its 100-DMA (Daily Moving Average) placed at Rs 8,070-odd level now.

The pullback has been swift, with the commodity crossing its 50-DMA placed at Rs 8,560, and seen within striking distance of its 20-DMA at Rs 8,960. The broader outlook on the basis of the price-to-moving averages action remains positive for Crude Oil.

Among the key momentum oscillators, the Slow Stochastic has turned favourable, while the 14-day RSI (Relative Strength Index) and MACD (Moving Average Convergence-Divergence) are yet to recover from the earlier sell-off.

Accordingly to the weekly Fibonacci chart, the MCX Crude Oil futures have given a buy signal on crossing the weekly R3 (Resistance) placed at Rs 8,835. Thus, the bias for the remainder of the week is likely to remain positive as long as the commodity sustains above the support range of Rs 8,665 - 8,545. On the upside, the commodity may look to test its 50-DMA.

On Wednesday, the MCX Crude Oil July futures are likely to seek support around Rs 8,715, below which the next support levels would be as per the weekly support range mentioned above. In case of an upside, the commodity is likely to face resistance around Rs 8,875 - 8,905 - 8,950. 

Natural Gas

Bias: Cautious

Last close: Rs 529

Support: Rs 502, Rs 430

Resistance: 607

One needs to exercise a bit of caution while trading in Natural Gas futures as firstly the commodity is extremely volatile and secondly unlike Crude Oil the short-term bias for the commodity has turned marginally negative.

The Natural Gas futures 20-DMA at Rs 598 has slipped a tad below its 50-DMA placed at Rs 607. This has happened after a gap of almost four months.

As per the daily charts, the commodity could swing in a wide range of Rs 424 to Rs 607, with immediate support seen at Rs 502 - its 100-DMA and resistance around the short-term moving averages mentioned above.

The key momentum oscillators seem to be in oversold zone. Hence, one can expect a limited downside from current levels. 

As per the weekly Fibonacci chart, the MCX Natural Gas July futures have also given a Buy signal on crossing the weekly R3. The bias for the remainder of the week is likely to remain positive as long as the commodity sustains above the support range of Rs 514.30 - 502.30.

Failure to hold the support zone could see the commodity dip back towards its weekly close of Rs 486, followed by support at Rs 470 and Rs 440. The 200-DMA for Natural Gas futures stand at Rs 430-odd level.

On Wednesday, as per the daily Fibonacci chart, MCX Natural Gas July futures may trade in a range of Rs 514.40 to Rs 543.70; with support expected around Rs 523.80 - 520 - 517.20 and resistance likely around Rs 534.20 - 538 - 540.90.