Oil likely to snap 7-week winning streak as China's economic woes counters tighter supply; Brent drops to $84/bbl

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₹6,744 per bbl, having swung between ₹6,616 and ₹6,754 per bbl during the session so far, against a previous close of ₹6,685 per barrel. China, the world's biggest oil importer, is seen as playing a major role in shoring up oil demand over the rest of the year. However, the country's post-pandemic recovery has been sluggish, weakened by low domestic consumption, plunging factory activity and a debt-ridden property sector.

These financial contagion risks have raised concerns that China will not meet its annual growth target of five per cent without substantial stimulus measures. China also made a rare draw on crude oil inventories in July, the first time in 33 months it has dipped into storage, according to news agency Reuters. Another factor weighing on prices are concerns that the US Federal Reserve is not quite finished raising interest rates to tackle inflation.

The higher borrowing costs can impede economic growth and in turn reduce overall demand for oil. Data showed that US crude oil inventories fell by nearly six million barrels last week on strong exports and refining run rates. Weekly products supplied, a proxy for demand, rose to the highest since December.

Religare Broking has neutral/sideways sentiments on MCX Crude Oil. ‘’MACD bearish crossover suggest possibility of weakness . Dip below 6,550 ranges may extend the fall.

Rebound above 6,720 may offer may strengthen the prices as well,'' said the brokerage firm in its research report. Religare sees technical levels between ₹6,330 - ₹7,020. The turnaround is seen at ₹6,720.Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!