Informist, Thursday, Dec 29, 2022
By Sayantan Sarkar
MUMBAI – Crude oil contracts on domestic and international exchanges were in bear territory for the second straight day today as concerns about lower demand from China continued to hit the sentiment of investors.
* After easing restrictions recently, China has witnessed a spike in new COVID-19 infections over the past few weeks. This has raised concerns about renewed lockdowns and lower usage of fuel for travel and social activities.
* At 1758 IST:
–January contract on the Multi Commodity Exchange of India was down 0.9% at 6,460 rupees per barrel.
–February contract on the New York Mercantile Exchange was down 1.5% at $77.76 per bbl.
* At 1758, the traded value in the January crude oil contract on MCX was at 7.69 bln rupees, according to the exchange’s website.
* “Oil prices are dropping for a second day, erasing some more of the pre-Christmas rally amid uncertainty over the Chinese outlook and the limited impact of Russia’s response to the G7 (Group of Seven) price cap,” Criag Erlam, senior market analyst at OANDA, UK, said in a note.
* “Volatility is likely going nowhere fast as we navigate another highly uncertain year, albeit one that surely promises plenty of surprises and twists and turns along the way,” Eralm said.
* Meanwhile, the US has announced that travellers from China will need to submit a negative COVID-19 report to enter the country while India has made COVID test mandatory for all passengers coming from China. Countries, including Japan and Malaysia have also imposed restrictions on travellers from China. This is likely to lower demand for crude oil as China is the biggest importer of the commodity.
* Investors will now focus on the release of the official weekly inventory data by the US Energy Information Administration later today. The American Petroleum Institute reported on Wednesday that crude oil inventories in the country fell by 1.3 mln bbl for the week ended Friday. If the US energy department releases similar numbers today, it could be bullish for prices, said analysts.
* Outlook for the evening session by Angel One Commodities:
–MCX contract is seen at 6,250-6,770 rupees per bbl
–NYMEX contract is seen at $77.40–$79.60 per bbl
US$1 = 82.79 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
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