India Crude: Up on uncertainties over Keystone pipeline resumption

Informist, Tuesday, Dec 13, 2022

By Chinmay Mungse

MUMBAI – Crude oil prices in India and abroad remained firm due to rising prospects of an extended outage in the Keystone pipeline between US and Canada.

* Canada’s TC Energy Corp, which operates the Keystone pipeline, said it was uncertain about how long it would take to resume supplies following a major spill last week.

* Further relaxation in COVID-19 curbs in China also supported crude oil prices. In a move away from its harsh zero-COVID strategy, China shut down an app for tracking domestic travel.

* “Oil prices are advancing again on Tuesday,” said Ed Moya, senior analyst at OANDA, UK. “This comes amid further relaxations of COVID curbs in China, the threat of lower Russian output in response to the G-7 price cap, an outage on the Keystone pipeline in the US.”

* A weaker US dollar against a basket of major currencies also supported crude oil prices. A weak dollar makes the greenback-denominated commodity cheaper for holders of other currencies, thus boosting demand.

* At 1801 IST:
–January contract on the Multi Commodity Exchange of India was up 0.3% at 6,104 rupees per barrel.

–January contract on the New York Mercantile Exchange was up 0.4% at $73.74 per bbl.

* However, worries about demand due to fears of recession capped gains in crude oil contracts.

* Investors and market participants will take cues from US consumer price inflation data and the US Federal Reserve’s policy meeting outcome.

* “We expect crude oil prices to remain volatile ahead of the US Fed meeting (outcome),” said Manoj Jain, research head at Prithvi Finmart.

* Outlook for the evening session:
–MCX contract is seen at 6,050-6,230 rupees per bbl
–NYMEX contract is seen at $72.00-$76.00 per bbl

End

US$1 = 82.80 rupees

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Ashish Shirke

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