India Crude: MCX up nearly 2% on weak rupee; US oil inventories down

Informist, Wednesday, Apr 7, 2021


By Sayantan Sarkar


MUMBAI – Crude oil contracts on Multi Commodity Exchange of India rose nearly 2% today due to the rupee's sharp fall against the US dollar, which made oil imports more expensive. 


* The rupee plunged the most in a day against the greenback since Aug 5, 2019, after the Reserve Bank of India's monetary policy statement prompted banks to place fresh bets in favour of the US dollar. 


* In international markets, crude prices were in the green as investors focused on COVID-19 vaccinations programmes around the world, and as crude stockpiles in the US fell for the week ended Friday. 


* The American Petroleum Institute said that crude oil inventories in the country fell by 2.6 mln barrels last week. 


* "For refinery demand though, crude draws are a positive indication, and that's what moved the market earlier in the day," Louise Dickson, oil market analyst at Rystad Energy said in a daily commentary. "The final EIA (Energy Information Administration) data are needed to confirm it, but a draw would validate that refinery demand is not only recovering from the winter storm but from a year of COVID-19." 


* Additionally, the International Monetary Fund has said that unprecedented public spending to fight the pandemic will push global economic growth to 6% this year.  


* At 1655 IST

    –The April crude oil contract on the Multi Commodity Exchange was up 1.9% at 4,452 rupees a barrel. 

    –The May delivery contract on the New York Mercantile Exchange was up 0.8% at $59.78 per bbl.


* On Tuesday, Iran and other world powers held 'constructive talks' and agreed to form working groups to discuss a possible revival of the 2015 nuclear deal. 


* "If negotiations progress and there is a breakthrough that would lift Iranian sanctions, the market will need to price in a significant amount of oil returning to export mode, which would impact global balances at a time when they are fragile," Dickson said. 


* Outlook for the evening session:

    –The MCX contract is seen at 4,310-4,470 rupees per bbl

    –The NYMEX contract is seen at $59-$62 per bbl.


US$1 = 74.55 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT


Edited by Ramya J.S. D'Rozario



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