Previous Week Capsule
If someone believes that making short positions in an equity class result into bumper gains, must shift to crude counter. The respective asset class is going through falling spree from a few days as no mechanism is providing any cushion to the crude oil prices. The demand mechanism has been broken badly as the WHO has announced ‘Coronavirus’ a ‘Pandemic’ to the world economy. The stimulus package deployed the administration of respective countries have signals a big fallout in aggregate demand. While, on the supply side, the persistent weakness in the relations of Saudi Arabia and Russia put no lid over the aggregate supply and crude oil prices slipped below 48-months low levels.
As per the EIA Report, crude oil inventories reported a build-up by 0.785 million barrels last week. The greenback government reported that the U.S. stockpiles now stand at 458.172 million barrels on March 06.
Major Concern this week
Only trigger on tunes of which the crude oil prices are likely to dance is the headlines from Coronavirus pandemic. Any further appreciation in the spread could drift the prices lower. Keep fingers crossed for any development of drug that could cure the Coronavirus.
API Forecast this week
As per the weekly American petroleum Institute (API) storage report, a slippage by 0.421 million barrels is expected today to 457.751 million till Jan March 13 is reported by them that might push the black gold prices north.
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 2.967 million per barrels or 2.329 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 2.967 million per barrels making it a total stock piles of 461.139 million per barrel in reserves of U.S. government till March 13.
Intraday Trading Strategy
On daily scale, MCX Crude Oil is trading near the kissing distance of its potential support that is placed at 1,802 levels. RSI is trading at 19.79 levels showing no signs of divergence and oversold.
A slippage below the psychological support of 1,800 levels will activate more sellers to a low of 1,750 and 1,700 levels respectively.