MCX Crude oil August futures may fall to Rs 7500/bbl ahead of OPEC+ meeting; Libyan output continues to rise

By Jigar Trivedi

WTI Crude oil futures saw the best week in nine and rose more than 4%, as tight supplies more than offset worries over an economic slowdown. Weak dollar index post the Fed meeting on expectations of less aggressive rate hikes coupled with better than expected inventory data aided the black gold. EIA crude oil inventories declined by 4.523 million barrels in the week ended 22nd July, the most in 8 weeks and four times more than forecasts for a 1.037 million barrel fall.

MCX Crude oil Outlook

Oil might be under pressure for the week as weak manufacturing data from China and Japan for the month of July weighed on demand outlook, while investors closely watched developments in the middle east ahead of this week’s OPEC+ meeting. Oil rig counts, which is an early indicator of future production, rose above 600, while Libyan output was restored to pre-blockade levels.

Two of the eight OPEC+ sources in a Reuters survey said a modest increase for September would be discussed on the 3rd August, while the rest said output would likely be held steady. We expect MCX Crude oil August futures to decline towards Rs.7,500 per bbl ahead of the OPEC+ meeting and bounce back post the meeting, if the cartel keeps output unchanged.

(Jigar Trivedi, Manager — Non-Agro Fundamental Research, Anand Rathi Shares & Stock Brokers. Views expressed are the author’s own.)