Crude oil has been like the energizer bunny in 2018; it just keeps on going. We are seeing backwardation contract in WTI and that will benefit investors who are long in a commodity. The monthly roll process will generate positive returns for them. Both WTI and Brent one-year spreads from the active month are both trading at around $6 per barrel backwardation. OPEC, the oil cartel, is due to meet on June 22. If Russia and Saudia Arabia cooperate we may see prices remain at elevated levels. Iran's oil exports will likely be impacted in the coming months as international buyers turn to other suppliers for barrels. US Shale has a capacity constraint. That is why the crude market is ignoring rising rig data from the US. In MCX, we expect any correction only below 4700. We can see a formation of rising wedge on daily chart so reversal may happen if Crude happens to close below 4700. On the upside, expect resistance near 4900-4950. Buy on dips strategy should be used unless 4700 holds.
Target: Rs 162
Stop loss: Rs 155
Aluminum has successfully defended the retracement level of 23.6% taken from high of 178.85 and low of 145.50. It is currently trading above retracement level of 38.2% and next resistance comes at 50% retracement at 162.20. The price action dictates positive trend owing to the higher top and higher bottom formation. It is trading above 13, 20 and 50, 200-day moving average so all trends (short, intermediate and long) are positive. The oscillator RSI_14 is above 58 with no divergence so we recommend taking a long position with a target of 162 and stop loss of 155.
Buy Natural Gas
Target: Rs 197
Stop loss: Rs 188
is trading above 200 DMA after February in MCX. The range from Feb to May was 160 to 180 and now range breakout has been witnessed. The recent correction in Natural gas
tested the upper end of the range and has successfully defended it so we now expect Natural Gas
to trade in a new range of 180-200. The oscillators are trading above 50 indicating bullish trend and the prices are trading comfortably above all its important moving average. So we recommend creating a long position with a target of 197 and stop loss of 188.
The analyst may have positions in any or all the commodities mentioned above.