Informist, Friday, Dec 16, 2022
By Chinmay Mungse
MUMBAI – Crude oil prices in India and abroad fell significantly today as the persistent interest rate hikes by global central banks have heightened worries about recession. This has dampened the outlook for crude oil demand.
* After the US Federal Reserve’s 50-basis-points rate hike on Wednesday, the European Central Bank and Bank of England also raised interest rates by a similar quantum in their monetary policy meetings on Thursday. They also said that more interest rates are needed in order to tame the rising inflation.
* “Investors and traders are worried that crude demand could worsen due to recessionary risks amid tighter financial conditions,” said Sriram Iyer, senior analyst at Reliance Securities. “Tighter financial conditions could worsen risk appetite and lift the dollar and cap upside.”
* A section of the Keystone pipeline between Canada and the US reopened after being shut down for a week due to a leak, which also put pressure on crude oil prices.
* Oil prices were also weighed down by lower-than-expected factory output of China. Retail sales in the world’s second-largest economy fell by 5.9% in November due to its strict COVID-19 restrictions.
* “Disappointing retail sales data from China piled onto the demand concerns, further pressuring crude oil prices,” said Ajay Kedia, research head at Kedia Comtrade.
* At 1658 IST:
–January contract on the Multi Commodity Exchange of India was down 3.4% at 6,170 rupees per barrel.
–January contract on the New York Mercantile Exchange was down 2.2% at $74.45 per bbl.
* Crude oil contracts are expected to trade in a narrow range due to lack of fresh cues in the international market.
* Outlook for the evening session:
–MCX contract is seen at 6,070-6,220 rupees per bbl
–NYMEX contract is seen at $73.00-$76.00 per bbl
End
US$1 = 82.87 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Ashish Shirke
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