Informist, Monday, Aug 8, 2022
By Chinmay Mungse
MUMBAI – Crude oil contracts in India and abroad were trading in the red today, pressured by concerns over demand from China amid rising cases of COVID-19. The summer driving season in the western hemisphere is also coming to an end, which further dulled the demand for crude oil.
* China, the world’s top crude importer, imported 8.79 mln barrels per day of crude in July, up from a four-year low in June, but still 9.5% lower than a year ago, customs data showed.
* “Crude oil prices hovered near multi-month lows as the demand from China took a hit,” said Ajay Kedia, research head at Kedia Comtrade.
* The recent weakness in crude oil prices and refinery margins, in response to signs of softening demand, led to a reduction in contracts in bullish crude oil bets by 29,000 to 353,000 lots, the second-lowest level since April 2020.
* “The reduction was primarily driven by speculators exiting gross West Texas Intermediate contracts amid a continued release of oil from strategic reserves and weekly data pointing to a softening in gasoline demand,” said Saxo Bank in a report.
* Further, the increased bets of aggressive interest rate hikes from the US Federal Reserve and other major central banks at their upcoming meetings also weighed on crude oil prices as such moves are expected to slow down economic activity and reduce consumption.
* At 1631 IST:
–August contract on the Multi Commodity Exchange of India was down 0.8% at 7,033 rupees per bbl.
–September contract on the New York Mercantile Exchange was down 1% at $88.10 per bbl.
* Investors are now eyeing the US consumer price inflation data, due for release on Wednesday, to gauge the rate hike trajectory by the US Fed. According to a poll by Dow Jones, the US CPI inflation is expected to increase 0.3% month-on-month in July.
* Outlook for the evening session:
–MCX contract is seen at 7,050-7,250 rupees per bbl
–NYMEX contract is seen at $87.00-$90.00 per bbl
US$1 = 79.66 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Tanima Banerjee
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