Expect MCX Crude To Touch Levels Of Rs 7500, Buy On Dips

Motilal Oswal Financial Services has advised Buying MCX Crude on dips and sees a resistance at Rs.6800. The firm sees a target of Rs 7500 on crude futures on the MCX.

According to Motilal Oswal Financial Services, the new sanctions are more like a marathon than a sprint. "As more Russian oil flows outside the West's control, blockades will become even less effective. Prices need a global boost along with Chinese demand recovery to touch higher levels. Russia sanctions look like the status quo till markets don't see any immediate reaction in form of Russian retaliation. The trend for oil looks positive however, markets need clarity on demand variables. Buying on dips is advised with resistance on MCX at Rs.6800, and a weekly close above this could target prices at Rs. 7300-7500. Supports are at Rs. 5900 and any closing below this level should negate the trend," the brokerage has said.

For China, oil demand is expected to rise by 1.0Mb/d in 2023, with an additional 0.2 Mb/d boost to ex-China demand from international travel, according to Motilal Oswal. This will match the average growth in global demand in the two decades before COVID.

On the Russian sanctions front, The G7-made up of the U.S., Canada, France, Germany, Italy, Japan, and the U.K.-also decided to enact a global price cap of $100 per barrel on premium oil products, like diesel, and $45 per barrel on oil and fuel, to avoid an increase in gas prices that would impact consumers.

"5th Feb marks another round of sanctions to slash Russia's war chest on Russian diesel, gasoline, and other refined oil products took effect. The G7 agreement bars access to maritime services like shipping, marine insurers, and other services on any ships carrying Russian oil products unless they are purchased at the set price or below," Motilal Oswal Financial Services has said.