According to a Bloomberg report, the  $110/$130 call  spread  on Brent  crude in  May and June  attracted bets equivalent to  about  30 million  barrels. 

 By Bhavik Patel 

 Oil  prices are  in the range of  5800-6200,  but there  are  also  fluctuations within this  narrow range.  Prices react to  every geopolitical event in the Middle  East,  especially in the Red Sea. We have seen crude  oil prices fall due to higher-than-expected US inventories and falling demand, but in the face  of  opposition, Houthi attacks  on ships in  the  Red Sea have  created a favorable tailwind. which they need  to  maintain. floating prices.  

 Recent attacks on Yemen by US and  British  forces will also  escalate  the  conflict,  as  the  Houthis will also retaliate  for  the attack. These events will give any correction in crude  oil prices the  opportunity to take long positions. Hedge funds and other  money  managers ended the  final  week of 2023 with the  highest number of  new bearish positions in futures and options  since March and the  second-biggest increase  in  volume.  weekly  short  additions since 2017. 

  The reason  we  like  to  hold a long position is  the  balance between  supply and  demand,  which  indicates an uptrend. January’s huge  surplus  is expected to shrink  thanks to OPEC+  voluntary cuts  and  another  Libyan  oil field  could be closed. US  crude oil supply will continue  to increase  in 2024, but at a slower  rate. Traders are optimistic  that Brent could reach $110 by  April,  although we do not  expect prices to rise as sharply. According to  a  Bloomberg report, the  $110/$130 call  spread  on Brent  crude in  May and June  attracted bets equivalent to  about  30 million  barrels. Buyers  of this  special spread  option  will benefit  if oil prices  reach $110/barrel  by the end of March and  the  end of April, when the May and June  options expire  respectively.

  Therefore,  we believe the downside is limited but the upside will be  limited to  around  $86 to $90. However, fundamentals are  now  pointing  to  an uptrend, whether it’s a smaller  surplus  ahead  or  tensions in the  Red  Sea,  any dip around  5,900  is a buying  opportunity. 

Expected  target  is 6,200 to 6,300  and  stop loss is 5,800 for  MCX.  

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