By Bhavik Patel

Oil prices could see better 2023 than 2022. We believe the price will sustain above $90 as money managers have increased their long position after Brent breached $80 on the back of expectation of increased oil demand from China and rest of the world. Both IEA and OPEC have issued in their report, that they expect crude oil demand to increase in 2023. Global oil demand will grow to 101.2 million barrels per day in the current year and will continue growing to hit 106 mb/d by 2030. Global oil demand will grow by 1.5 mb/d in 2023, with China accounting for 650,000 b/d after the country abandoned its rigorous zero-Covid policy.

In MCX, on the daily chart, momentum oscillator still points to a positive short-term trend as RSI_14 is at 58. Prices have closed above 50-day moving average but we have seen historically that Crude is unable to sustain above 50-day moving average for longer period as it struggles at higher level. Long term trend still points to bearish trend looking at lower high and lower low formation but in short term, we got first higher low formation which is indicative of bottom getting placed. 6760 is the immediate resistance and swing high that crude had failed to breach in the recent upswing.

If crude manages to break that zone, we would have higher high and higher low formation on daily chart which will change the trend of medium and long term to bullish from bearish. We would advice traders to let crude breach the zone of 6760-6800 before taking fresh long positions as multiple times in December 2022 and in January 2023, crude has reversed from that zone. So buy only above 6800 for expected upmove till 7100 and stoploss of 6700 in MCX Feb contract.

(Bhavik Patel, Currency and Commodity Analyst, Tradebull Securities. Views are author’s own. Please consult your financial advisor before investing.)

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