New Delhi, August 8: The upcoming week is set to be crucial for the commodity market. Market experts believe that fluctuations in international crude oil prices and the movement of the rupee against the dollar will play a significant role in determining market direction. Investors will particularly keep an eye on geopolitical conditions related to the Strait of Hormuz.
This past week, the global oil market experienced considerable volatility. On Friday, Brent crude rose by 1.29%, reaching $83.55 per barrel. However, this remains below last week’s closing level of $90.12 per barrel. Meanwhile, U.S. West Texas Intermediate (WTI) crude for September delivery closed at $78.18 per barrel, down from the previous week’s $84.67 per barrel.
Analysts attribute this instability in the oil market primarily to developments in the Strait of Hormuz, one of the world’s most vital oil transport routes. There is growing anticipation in the market that a shipping agreement may be reached in this region, which could facilitate smoother oil supply.
At the beginning of the week, WTI crude saw a sharp decline when U.S. President Donald Trump indicated a move towards diplomatic solutions, halting potential military action against Iran. Subsequently, positive news regarding maritime operations led to some recovery in oil prices.
Commodity experts suggest that if a formal agreement is reached to fully open the Strait of Hormuz, crude oil prices may face additional pressure. Conversely, if tensions in the region escalate again, geopolitical risk premiums could return to the oil market, pushing prices higher.
In the domestic market, crude oil on the Multi Commodity Exchange (MCX) fell to around ₹7,100 per barrel during the week but later improved, closing near ₹7,400.
Technical analysts indicate that the nearest resistance level for MCX crude is between ₹7,500 and ₹7,550. Meanwhile, the ₹7,380 to ₹7,300 range is considered significant support in the near term.
Experts warn that if prices slip below this support level, MCX crude could drop to ₹7,250, with strong support expected between ₹7,100 and ₹7,000.
Additionally, the Indian rupee displayed a strong trend throughout the week. The USD/INR exchange rate closed at approximately ₹95.2, having dipped to around ₹94.9 during the week.
Analysts note that technical indicators currently favor the rupee. If the USD/INR rate remains below ₹94.9, the rupee could strengthen further, potentially reaching levels between ₹94.7 and ₹94.5.
On the other hand, the ₹95.2 to ₹95.4 range is viewed as a critical resistance area for the dollar. Should this level be breached, the USD/INR pair could rise to ₹95.5 to ₹95.7, increasing pressure on the rupee.
Regarding technical indicators, the Relative Strength Index (RSI) has dropped from higher levels, while the MACD indicator shows a slowdown in the dollar’s upward momentum. This situation currently supports the rupee.
However, experts caution that next week’s direction for the rupee and the commodity market will depend on several external factors, including the movement of the U.S. dollar, crude oil prices, foreign investment flows, and geopolitical conditions in West Asia. If global conditions remain stable, the rupee may gain strength, and oil prices could continue to soften.
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