Commodity Radar: Why chasing current crude oil rally may backfire — Anand Rathi expert maintains ‘Sell’ on rise

Crude oil prices witnessed a sharp spike on Wednesday, relieved by the expectations of lower than estimated output hike by OPEC+ in October. The October crude oil futures jumped 1.4% to hit the day’s high of Rs 5,554 per BBL.

Oil prices were up on the COMEX as well, with US WTI trading at $62.33 per BBL, gaining by $0.60 or 0.97% while the Brent Oil price was hovering around $66.01, rising by $0.56 or 0.86%.

This comes as a big relief for oil traders following a $5 per barrel fall last week on fears of oversupply in the wake of higher oil output by the global oil cartel.

The group has already scheduled a 1,37,000 bpd increase for October and could add the same for November to regain market share.

Giving his take on the current trends and outlook, Naveen Mathur, Director – Commodities & Currencies, Anand Rathi Shares and Stock Brokers said that oil market has experienced a volatile start to October as markets weighed OPEC+’s cautious production strategy against rising global supply and slowing fuel demand.

“Last week, WTI crude oil prices fell nearly 7.5% to a multi week’s low after reports suggested the group was considering larger output increases. However, the OEPC+ and its allies, opted for a modest addition of 137,000 bpd for November,” Mathur said.OPEC’s cautious approach seems to have stabilised the markets so far this week, the Anand Rathi expert said, explaining how the market has been balancing ample supply with geopolitical risks.Global inventories rose by 269 mn bbl in the first nine months of 2025, with China accounting for over a third. On the Geopolitical front, Ukrainian drone strikes on Russian refineries have disrupted fuel processing, tightening Russian export availability and providing some bullish support.

Mathur expects oil markets to trade in a cautious range as they closely monitor OPEC+ output compliance, U.S. economic data delayed by the government shutdown, and any further developments in Ukraine.

While the geopolitical tensions and strategic stockpiling is providing intermittent price support, supply glut threat persists, keeping the bearish trend intact barring any major surprises, he added.

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On the weekly chart, MCX Crude Oil (October contract) registered a high of Rs 6,585 though it failed to sustain at elevated levels and has since witnessed a corrective decline.

The price action on the weekly chart continues to exhibit a lower-top, lower-bottom formation, indicative of a sustained bearish trend and underlying negative sentiment in the market, Mathur warns.

Adding to the bearish bias, a negative crossover on the MACD, coupled with a bearish divergence, further confirms the weakening momentum and signals the potential for continued downside, he added.

The Anand Rathi Director has placed key support levels at Rs 5,320 followed by Rs 5,100, while resistance at Rs 5,800 – Rs 6,040 zone.

In light of the prevailing technical setup, a sell-on-rise strategy is advisable.

Sell MCX crude oil on rise around Rs 5,760-5,800 with a stop loss of Rs 6,040 and target of Rs 5,320.

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(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)