Low crude oil and other commodity prices globally to bring respite to Narendra Modi government

Global commodities have tumbled in recent months, ending an extended bull run that had hurt India by widening the current account and fiscal deficits, besides raising subsidies and weakening the rupee. All this is now reversing. Petrol prices are at a 16-month low, cooking oil and rubber are at a five-year low. Sugar and cotton are also down. This augurs well for a lower rate of inflation.

Why is oil falling?

Supply has increased substantially while demand outlook is weak

US shale output has risen significantly

OPEC shows no signs of cutting output

Saudi Arabia not willing to bear burden. It increased Sep output 0.5% to 9.65 million barrels per day

IEA has cut global energy demand forecast four months in a row

IMF has scaled down the outlook for global economic growth

Has oil bottomed out?

Bank of America and BNP Paribas SA say prices to hold above $80 a barrel

Analysts divided, but oil rose to $87 on Friday

Oil below $80 can make some shale fields unviable

Saudi Arabia may let oil fall to keep some suppliers out

Oil likely to fall further if OPEC does not cut supply

OPEC supplies only 40% of global oil.

What can make oil rise again?

Revival in economic growth in Europe and Asia Any output cut by OPEC Turmoil in the Middle East spikes to disrupt supply

Does oil affect other commodities?

Impacts Sugar. More cane is used for sugar, as ethanol unattractive at low oil prices

Reflects weak economic growth which affects other commodities