Crude oil futures up 1.30% in afternoon trade.
Crude oil futures gained 1.30 percent to Rs 3,982 per barrel on January 24 as participants increased their long position as seen by the open interest.
Oil prices were getting support after the US Energy Information Administration data showed a fall in US crude oil and distillate inventories by 405,000 barrels for the week ending January 17. The fall in inventory was less than 1 million barrels expected by analysts according to a Reuters poll.
Brent crude has fallen $2.73, or 4.21 percent during the week on concerns over spreading coronavirus in China that have killed 25 people and infected 800 people denting travel and economic outlook.
Shweta Shah, Energy Analyst at Motilal Oswal said, the development over the next three weeks will be crucial for the crude oil markets as this has still not turned into an epidemic. Once there is evidence that the outbreak is contained and thus the economic disruption is coming to an end, sentiment on oil should improve, bringing prices back up.
She further said crude prices to remain under pressure in the first half of next year, due to a forecast increase in global oil inventories. Prices are expected to rise in the second half of 2021 due to forecasted global oil inventory draws and demand growth on the back of modest acceleration of global economic growth.
According to Abhishek Bansal, Chairman and MD, Abans Group, crude oil prices are likely to remain lower as the spread of a virus from China may hurt fuel demand.
He also added oil prices were also under pressure as the International Energy Agency (IEA) expects a surplus of 1 million barrels per day in the first half of 2020 with ample US supply is the main reason behind the recent drop in crude oil prices.
In the futures market, crude oil touched an intraday high of Rs 3,995 and an intraday low of Rs 3,951 per barrel on MCX. For the February series, the crude touched a low of Rs 3,917 and a high of Rs 4,663.
On the Multi Commodity Exchange (MCX), crude oil delivery for March contracts gained Rs 43, or 1.09 percent, to Rs 3,990 per barrel with a business turnover of 1,279 lots.
Crude for delivery in February contracts jumped Rs 45, or 1.14 to Rs 3,976 per barrel with a business volume of 28,532 lots.
The value of the February contract traded so far is Rs 2,466.75 crore and March contract saw value of Rs 59.96 crore.
Crude oil prices corrected in the last trading session after prices broke the support zone of Rs 3,960 and drifted lower towards Rs 3,930 levels on an intraday basis. The Short-term trend is negative for prices as it is trading below nine and 20 Days EMA on hourly basis, according to Axis Securities.
The broking firm advised its clients to sell Crude oil below Rs 3,920 for the target of 3890 on an intraday basis.
West Texas Intermediate crude gained 0.07 percent to $55.62 per barrel, while Brent crude, the international benchmark was up 0.03 percent to $62.05 per barrel.