MCX crude might test Rs 5,000 a barrel soon

Crude oil is on the boil and prices could rise another 2 per cent immediately.US light sweet oil traded up almost 2.5 per cent at $ 70.78 a barrel intraday Wednesday in response to the US walking out of the Iran deal. The immediate resistance, based on Nymex crude, is at $ 72.49.

The intraday price of the near month contract on commodity exchange MCX was Rs 4786/bbl (trading continues through 23:30 hrs IST). Extrapolating Nymex resistance of $ 72.49, MCX crude could potentially rise another 2 per cent or more within a week past Rs 4883 (at 67.36 a US dollar).

This extrapolation gains credence from the buildup of bullish bets by the top 10 clients of MCX as of Tuesday. These clients’ open positions account for two-fifths (10,201 contracts) of the exchange’s near month open positions of 25,137 contracts intraday Wednesday.

The top 10 shorts (bearish bets) account for over one-fourth (6,661 contracts), or much lesser, of the MCX’s near month OI. A rise in crude can pressure the current account deficit and the rupee and cause bond yields to rise. This in turn could impact share prices, going forward.