New Delhi [India], August 3 (ANI): Crude oil prices are expected to remain range-bound with a bearish bias through August as easing geopolitical risks and improving supply conditions reduce the supply-risk premium, although analysts said developments surrounding the Strait of Hormuz and diplomatic negotiations between the United States and Iran will continue to dictate short-term market movements.
“Crude oil is displaying a sideways-to-bearish trend, though prices are expected to hold within a broader trading range of Rs 7,290 to Rs 8,280 per barrel in the domestic market,” Ravinder Kumar, Senior Research Analyst at SMC Group, told ANI.
He added that global crude oil prices are expected to hover in the USD 70-90 per barrel range over the next month.
Analysts said crude oil is currently trading at around USD 79.80 per barrel in international markets and approximately Rs 7,600 per barrel in the domestic market.
Dinesh Somani, Proprietor of ProIntelliTrade Services, told ANI that recent movements in crude oil futures have been driven more by headlines than by underlying market fundamentals.
According to him, price action has been influenced primarily by geopolitical developments, social media posts and breaking news, resulting in sharp gap-up and gap-down openings.
Somani said US President Donald Trump’s statement indicating progress towards reopening the Strait of Hormuz and signalling a possible easing of geopolitical tensions has reduced the immediate supply-risk premium in crude oil prices. Markets reacted by pricing in a lower probability of supply disruptions, leading to a sharp decline in prices.
However, he cautioned that negotiations remain uncertain and volatility is likely to persist as fresh developments emerge.
Providing a technical outlook, Somani said immediate support for WTI crude oil is expected around USD 76 per barrel, with prices likely to trade in the USD 73-88 per barrel range over the next month. On MCX crude oil, key support is placed in the Rs 7,200-8,500 per barrel range.
“Traders should remain cautious, as sentiment-driven volatility is likely to dominate over traditional supply-demand fundamentals in the near term. Strict risk management and disciplined position sizing are advisable until geopolitical uncertainty subsides,” he said.
Amit Gupta, Senior Research Analyst at Kedia Advisory, told ANI that crude oil, currently trading around USD 79.50 per barrel, is expected to decline to around USD 70 per barrel over the next month. However, he said prices could rise towards USD 90 per barrel if market conditions reverse.
Kaynat Chainwala, Vice President-Commodity Research at Kotak Securities, told ANI that crude oil spent July swinging from the high-USD 60s to a peak of USD 88 per barrel before easing back towards USD 80, as markets repeatedly repriced Strait of Hormuz risks against diplomatic signals from Washington and Tehran.
She said the repricing accelerated after Trump called off a planned large-scale strike on Iran’s energy infrastructure and announced negotiations centred on reopening the Strait of Hormuz and Iran’s denuclearisation, pulling WTI sharply lower as markets unwound the geopolitical risk premium.
However, Iran’s foreign ministry has denied any direct talks with the United States, instead pointing to a separate diplomatic channel through Oman, indicating that de-escalation remains unconfirmed.
“For August, that keeps price action headline-driven. A USD 75 floor still holds on tight US inventories and the risk that talks stall, while the path towards USD 90-100 depends on the diplomatic track breaking down and Hormuz risk resurfacing. If negotiations hold, USD 75-85 looks like the more realistic range, while USD 100 remains a shock scenario tied to talks collapsing rather than the base case,” she said.
Chainwala expects WTI crude to find support at USD 77.5 and USD 75, with resistance at USD 87 and USD 93.5. For MCX crude oil, she sees support at Rs 7,450 and Rs 7,150 per barrel, while resistance is placed at Rs 8,300 and Rs 9,000.
Anindya Banerjee, Head of Research at Kotak Neo, told ANI that the Indian rupee is expected to appreciate from the current level of around 95.34 against the US dollar to about 94.50 by August-end and further to 94 by September-end, supported by robust Foreign Currency Non-Resident (Bank) [FCNR(B)] inflows.
He said if Brent crude remains below USD 90 per barrel, the rupee could strengthen further towards 93, while a rise in crude prices towards USD 100 per barrel would likely keep the currency around 94. Banerjee added that the Reserve Bank of India’s dollar absorption would help ensure an orderly appreciation while supporting overall macroeconomic stability. (ANI)
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