Informist, Monday, Nov 28, 2022
By Sayantan Sarkar
MUMBAI – Crude oil contracts in India and abroad slumped to multi-month lows today as concerns about rising COVID-19 cases in China and protests against lockdowns in the country weighed on sentiment.
* The December crude oil contract on the Multi Commodity Exchange of India fell to 6,052 rupees per barrel today, its lowest since January. The price of West Texas Intermediate crude on New York Mercantile Exchange fell to $73.61 a bbl, its lowest since December 2021.
* China continues to see record daily cases of COVID-19, which has resulted in some cities tightening mobility restrictions. Reports of protests against COVID-induced restrictions in China are also likely to affect demand for fuel in the world’s largest importer of oil.
* Additionally, the US government relaxed oil sanctions against Venezuela by allowing Chevron to restart oil production at some of its joint ventures in the country.
* “The easing in sanctions will have a limited impact on the market, given that volumes will be relatively small. The easing also appears to allow the export of this crude to the US,” Warren Patterson, head of commodities strategy at ING Group, said in a report.
* At 1838 IST:
–December contract on the Multi Commodity Exchange of India was down 3.6% at 6,092 rupees per bbl.
–January contract on the New York Mercantile Exchange was down 2.8% at $74.09 per bbl in electronic trade.
* This week, investors will focus on the impending price cap that is scheduled to be imposed on Russian oil supply by the Group of Seven countries on Dec 5. The European Union is also likely to completely phase out Russian crude oil supply by the same day.
* Outlook for the evening session by Kotak Securities:
–MCX contract is seen at 5,981-6,396 rupees per bbl
–NYMEX contract is seen at $71.40-$78.75 per bbl
US$1 = 81.67 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Aditya Sakorkar
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