Crude Oil and Natural Gas Outlook - March 28, 2022 - Reliance Securities

Mr. Sriram Iyer, Senior Research Analyst at Reliance Securities

International oil prices rose on Friday on Friday as a missile attack on an oil distribution facility in Saudi Arabia worsened concerns of supply for the fuel in an already tight market.

Domestic crude oil futures ended weaker on Friday, while Energy Index futures rose tracking Natural Gas futures.

Reuters reported that Yemen's Houthis launched attacks on Saudi energy facilities on Friday and the Saudi-led coalition said Aramco's fuel distribution station in Jeddah had been targeted by an attack.

Saudi Arabia said it will not hold responsibility for any shortage of oil supplies in global markets caused by Houthi attacks on its oil facilities.

However, further upside was capped after the Biden administration is considering another release of oil and this time could be bigger than the sale of 30 million barrels earlier this month.

The U.S. oil rig count, an early indicator of future output, rose 7 to 531 last week, its highest since April 2020, as the government urged producers to boost output in the wake of Russia's invasion of Ukraine.

On the speculative side of things, data from CFTC showed that money managers raised their net long U.S. crude F&O positions by 4,764 contracts to 273,515 in the week to March 22.

International oil prices tumbled close to 3% this early Monday morning in Asian trade as concerns over slower fuel demand in China grew after authorities in Shanghai said they would shut the country's financial hub for a COVID-19 testing blitz over nine days.

However, OPEC+ is less likely to raise oil output at a faster pace than the recent months and the ongoing war between Ukraine and Russia, will keep downside capped.

Technically, if WTI Crude Oil trades below $109.00 level it could witness Bearish momentum up to $107.20-$105.80 levels. Resistance is at $111.20-$113.00 levels.

Brent Oil Futures could witness sideways to downside momentum up to $112.00-$109.50 levels. Resistance is at $113.80-$115.00 levels.

Domestic crude oil prices could start weaker this early Monday morning, tracking a negative start in the overseas prices.

Technically, MCX Crude Oil April holds resistance at 8670-8750 levels. Support is at 8590-8522 levels.

U.S. Natural gas (NG) prices rallied on Friday following the US and EU joint deal to provide 15 billion cubic centimeters of LNG to Europe this year.

The deal aims to reduce reliance on Russian energy exports.

Indian NG prices also ended stronger on Friday, tracking overseas prices.

The weather forecast shows mixed weather across the West Coast and cooler than normal weather across the East Coast during the next 6-10 days.

LNG exports were stable in the latest week.

U.S. NG prices have started stronger this early Monday morning in Asian trade.

Technically, NYMEX Natural Gas could trade in a range of $5.55-$5.70 levels in coming session.

Domestic NG prices could start stronger this early Monday morning tracking a positive start in the overseas prices.

Technically, MCX Natural Gas March holds a strong resistance at 425-431 levels. Support is at 420-416 levels.