Previous Week Capsule
One can tag any reason to the Thursday pullback either it be ‘Short Covering’ after an excessive meltdown or U.S. administration’s move of buying 30 million barrels of crude oil to comply with the Strategic Petroleum Reserve to cushion the falling price as U.S. oil producers are on edge of making a deep retrenchment of employees after crude oil prices witnessed south. But the pullback that has been witnessed after the talks of 2 trillion dollar stimulus package in U.S. administration to support the slump in the economy is expected to sustain more. However, the recent lockdown in India (3rd largest consumer of crude oil) seems to keep the crude prices under pressure.
As per the EIA Report, crude oil inventories reported a build-up by 1.954 million barrels last week. The greenback government reported that the U.S. stockpiles now stand at 460.126 million barrels on March 13.
Major Concern this week
As swift as the global administrations are opting for lockdown as the last resort to combat the spread of Coronavirus, crude oil prices seems to remain under pressure. Every major pharmaceutical is involved in discovery of drug to cure the Coronavirus and it will remain the only catalyst that will push the prices higher.
API Forecast this week
As per the weekly American petroleum Institute (API) storage report, a slippage by 1.250 million barrels is expected today to 458.876 million till March 20 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 3.468 million per barrels or 2.254 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 Five Weeks Exponential Time Series Forecast, according to which, the Crude Oil Inventories is expected to surge by 2.254 million per barrels making it a total stock piles of 462.380 million per barrel in reserves of U.S. government till March 20.
Intraday Trading Strategy
On hourly scale, MCX Crude Oil is marching towards its potential resistance that is placed at 2,157 levels. The primary trend line will continue to act as a major support. RSI is trading at 55.76 levels but expected to expand after breaching 60 levels. Any slippage to primary trend line will activate buyers for building long positions.