Informist, Monday, Jul 25, 2022
By Sayantan Sarkar
MUMBAI – Oil prices in India were up today, tailing benchmark global contracts as a soft dollar and supply shortage in spot markets buoyed sentiments among traders.
* A softer dollar against major peers makes crude cheaper for holders of other currencies.
* Meanwhile, tight supply in global spot markets also supported oil prices today.
* “Futures markets remain deeply in backwardation, suggesting that in the real world, prompt supplies are as tight as ever, however rising recession fears globally do suggest that gains are likely to be limited in the shorter-term, geopolitics aside,” Jefferey Halley, senior market analyst Asia Pacific, OANDA, said in a note.
* “Oil futures’ biggest problem is that the mind-boggling intra-day volatility seen of late is likely to reduce risk positioning, and thus, trading liquidity,” Halley said.
* Oil prices have been volatile today with prices see-sawing between positive and negative territory. Earlier in the day, global and domestic contracts were in the red.
* At 1850 IST:
–August contract on the Multi Commodity Exchange of India was up 0.2% at 7,677 rupees per bbl.
–September contract on the New York Mercantile Exchange was up 1.3% at $95.95 per bbl.
* Oil traders will keep an eye on the outcome of the US Federal Reserve’s next policy meeting on Wednesday. The Fed is likely to raise rates by at least 75 basis points, which may lower demand for the fuel in the US. The country is the world’s largest consumer of oil.
* Also, oil exports from Libya have stabilised with the country’s National Oil Corp stating that production will soon return to 1.2 mln bbl per day.
* The European Union last week said it would allow companies to deal with Russian corporations to supply oil to third-world countries. In March, EU had banned transactions between Russian and European companies involving import and transport of energy supplies.
* Outlook for the evening session:
–MCX contract is seen at 7,350-7,790 rupees per bbl
–NYMEX contract is seen at $92-$96 per bbl
US$1 = 79.73 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Michael Correya
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