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India Crude: MCX up on weak rupee; NYMEX dn on rise in US oil stock

Thursday, Nov 28, 2019

 

By Sayantan Sarkar

 

MUMBAI – Crude oil contracts today edged up on the Multi Commodity Exchange of India due to weakness in the rupee against the dollar, said analysts. On New York Mercantile Exchange, futures were down due to an unexpected rise in the US crude stockpiles and renewed tension between the US and China over Hong Kong, they said.  

 

The Indian rupee today closed at 71.60 against a dollar compared with 71.35 a dollar on Wednesday. A weaker rupee makes dollar-denominated commodities cheaper for domestic investors. 

 

At 1820 IST, the most-active December contract was up 0.5% at 4,146 rupees per barrel on the MCX, and the January delivery contract on the NYMEX was down 0.4% at $57.90 a bbl. 

 

The US Energy Information Administration reported that crude oil stockpiles rose by 1.6 mln bbl in the week ended Friday against analyst expectation of a 300,000-bbl decline. Crude oil production was also at a record high of 12.9 mln bbl per day, the data showed. 

 

Crude oil remained under pressure as US crude production surged to a record high amid an unexpected rise in the inventories, said Abhishek Bansal, chairman of ABans Group of Companies. 

 

In addition, US President Donald Trump signed into law a bill backing pro-democracy protests in Hong Kong, despite China vehemently opposing the move. China today warned the US that it would take "firm countermeasures" in response to the move. 

 

"…US President Trump has signed the Hong Kong Bill, which we believe will make it more difficult to reach a (partial) trade agreement with China," Commerzbank AG said in a report.

 

However, positive economic data from the US arrested the fall in prices of crude oil. The US government revised its GDP growth for Jul-Sep to 2.1% from 1.9% estimated earlier. 

 

Focus would now shift to the Organization of the Petroleum Exporting Countries and its allies' meet on Dec 5-6, where the oil cartel is expected to take substantial decisions to strengthen the market. 

 

OUTLOOK

" We expect choppy trade to continue as market players try to assess trade deal possibility as well as OPEC’s production policy however the general bias may be on the downside owing to higher US supply and demand concerns," Madhavi Mehta, an analyst at Kotak Securities said in a note.

 

The December contract on MCX is seen in the range of 4,061-4,237 rupees per bbl for the rest of the session, and the NYMEX contract for delivery in January is seen at $57.0-$58.8 a bbl, Kotak Securities said in its report.  End

 

US$1 = 71.60 rupees

 

Edited by Akul Nishant Akhoury

 

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