Previous Week Capsule
No matter how much production cuts on which the OPEC and its allies are co-operating, how much restrictions the U.S. administration levied on oil producers against their unfit and improper practices, the ball will always remain in the court of demand. The spread of Coronavirus in China and their suspension over travel from and to China has raised concerns over the demand of crude oil in second largest consumption country. The slippages in total demand of fuel jet due to restrictions over air travel and gaining momentum in crude oil inventories held by U.S. firms has triggered last week and crude oil prices fell like a house of cards.
As per the EIA Report, crude oil inventories reported a build-up by 3.548 million barrels last week. The greenback government reported that the U.S. stockpiles now stand at 438.043 million barrels on Jan 24.
Major Concern this week
The attack of Coronavirus in China and its spread in eight major countries will continue to remain a major trigger as any declaration on ‘World Emergency’ from World Bank will make the demand of crude oil more vulnerable.
API Forecast this week
As per the weekly American petroleum Institute (API) storage report, a build-up by 4.180 million barrels is expected today to 442.223 million till Jan 31 is reported by them that might push the black gold prices south.
Advisorymandi’s Forecast (Time Series)
After incorporating the Three weeks and Five Weeks Exponential Time –Series Forecasting in the previous 11 weeks crude oil inventories data reported by Energy Information Administration, we are expecting that resulted stockpiles of crude oil could surge by 0.198 million per barrels or plunge by 1.941 million per barrels respectively. In order to filter the time period, we have employed a Root Mean Square Error method (RMSE), which is pointing out for Three Weeks Exponential Time Series Forecast, according to which, the Crude Oil Inventories is expected to surge by 0.198 million per barrels making it a total stock piles of 438.241 million per barrel in reserves of U.S. government till Jan 31.
Intraday Trading Strategy
On daily scale, MCX Crude Oil has been bounced back after sensing support from 52-weeks low that was placed at 3,533 levels. RSI is trading at 26.83 levels showing no signs of divergence but an oversold situation cannot be ruled out. Stochastic oscillator is entered into oversold zone.
MCX Crude Oil had a gap up opening today as the oscillators were entered into oversold zone. It could be stated that buying interest was witnessed at lower levels. Any dip to 52-week low levels will generate buying opportunity to a high of 3,578 and 3,633 levels respectively.