Informist, Wednesday, Jan 4, 2023
By Sayantan Sarkar
MUMBAI – Crude oil contracts on domestic and international exchanges extended their fall today due to concerns about slowing of global economy and rising COVID-19 cases in China.
* Crude oil prices also fell as the International Monetary Fund warned that major economies are likely to record weak activity this year. The economies of the US, Europe, and China are slowing down and this is affecting the global economy more than in 2022, IMF Managing Director Kristalina Georgieva said on Sunday.
* Weak economic activities in major economies such as the US, China and Europe are likely to affect global economic health. These regions are the top consumers of crude oil along with India, which is the third-largest importer of oil.
* "The major factor that triggered selling was the looming recession and slowing factory activity in China. The recent data showing slowing factory activity in the world's biggest oil importing nation has added fuel to fire," said Ravindra V. Rao, head of commodity research at Kotak Securities.
* Rising COVID-19 cases in China has also put pressure on crude oil prices as the country is the largest importer of the fuel. Recently, China had eased restrictions, which had briefly supported oil prices. However, rising infections have once again clouded demand outlook for the country.
* At 1825 IST:
–January contract on the Multi Commodity Exchange of India was down 4.1% at 6,212 rupees per barrel.
–February contract on the New York Mercantile Exchange was down 3.3% at $74.44 per bbl.
* For more cues, market participants are now awaiting minutes of the US Federal Reserve's policy meeting, due to be released early Thursday morning.
* The market will also await the US Energy Information Administration's weekly crude oil inventory data later today.
* Outlook for the evening session by Kotak Securities:
–MCX contract is seen at 6,142-6,460 rupees per bbl
–NYMEX contract is seen at $73.0–$78.3 per bbl
End
US$1 = 82.80 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
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