Informist, Thursday, Jul 7, 2022
By Sayantan Sarkar
MUMBAI – After falling sharply in the earlier two sessions, crude oil prices in India and abroad jumped up today as supply remained tight and physical demand for the commodity increased.
* Demand in the physical market increased after global prices of crude oil slipped below $100 per barrel earlier this week.
* "In Asia, the lure of USD 100 a barrel of Brent crude has proved irresistible to physical buyers, and oil prices rallied today," Jeffrey Halley, senior market analyst Asia Pacific at OANDA Corp.
* "This perhaps highlights the disconnect between the speculative market on the futures exchanges, and the reality of the physical market where futures contracts remain heavily in backwardation, signalling immediate oil supplies are as tight as ever," added Halley.
* At 1907 IST:
--July contract on the Multi Commodity Exchange of India was up 5% at 8,159 rupees per bbl.
--August contract on the New York Mercantile Exchange was up 4.6% at $103.01 per bbl.
* Also, Russian crude oil production is expected to drop as the year progresses with sanctions from Europe and other countries coming into play.
* Further, members of the Organization of the Petroleum Exporting Countries have been producing less than their target outputs for past several months. This has added to the tightness in the market.
* Oil prices had tumbled earlier in the week as fears of global recession had weakened sentiment considerably. However, experts believe that the sharp correction in prices will be temporary as fundamentals are currently supportive of higher oil prices.
* Outlook for the evening session:
--MCX contract is seen at 7,680-8,200 rupees per bbl
--NYMEX contract is seen at $96.5-$107.0 per bbl
End
US$1 = 79.17 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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