Crude oil prices rallied for the fourth consecutive week. Last week, the Brent crude oil futures on the Intercontinental Exchange (ICE) ($80.8/barrel) gained 1.3 per cent. The crude oil futures on the MCX (₹6,720/barrel) was up 3.1 per cent.

Brent futures ($80.80)

Brent crude oil futures rose past $80-mark and hit an intra-week high of $82.6 before ending the week lower at $80.80. The contract holding above $80 is positive. However, there is a resistance emerging at $82.50.

If the contract can surpass this level, the next potential stop would be at $90, a notable barrier. Subsequent resistance is at $92. But if Brent futures undergoes correction, it can moderate to $77.50. Support below $77.50 is at $76.

That said, only a breach of $76 can turn the trend bearish.

MCX-Crude oil (₹6,720)

The February crude oil futures opened last week with a gap-up and went on to hit a high of ₹6,857 before softening to ₹6,720.

As it stands, the uptrend remains valid, and the contract is likely to rally. However, a drop in the price of Brent futures can weigh on the domestic oil prices.

In case the crude oil futures in the domestic market declines, it can find support at ₹6,500 and ₹6,300. A break below the subsequent support at ₹6,200 can turn the outlook weak. Below ₹6,200, key levels are at ₹6,000 and ₹5,850.

But if the current upward momentum is not disturbed, the contract can touch ₹7,000 or even ₹7,500 in the near-term.

Trade strategy: Last week, we suggested buying crude oil futures on a breakout of ₹6,650. Retain this trade with a stop-loss at ₹6,250. When the contract touches ₹7,200, revise the stop-loss upwards to ₹6,900. Exit at ₹7,500.

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