Prices unlikely to drop below $90
Crude oil prices, which are on the boil, are expected to consolidate at the current levels with a drop below $90 unlikely if the current fun-damentals hold, according to analysts.
By Deepa Krishnan, TNN |
MUMBAI: Crude oil prices, which are on the boil, are expected to consolidate at the current levels with a drop below $90 unlikely if the current fun-damentals hold, according to analysts. The weak dollar and tensions in the Middle East are driving the course of oil prices.
Prices have marginally consolidated on correction in the financial markets and on easing of worries, albeit temporarily on the Middle East front. According to MAPE Admisi Commodity Research, in the medium to long-term, crude would remain well supported by winter demand for heating oil, declining stockpiles in US, increased fund buying and a weak dollar.
“In the absence of further intervention by Opec to raise production, the outlook for crude prices is bullish and therefore, we expect crude to hover around $92-100 a barrel in the coming weeks. In the domes-tic markets, crude would be range-bound at Rs 3,600-3,850 a barrel,” said MAPE Admisi Commodity Research’s Debjyoti Chatterjee.
With crude breaching the psychological level of $95 a barrel, the next level to watch out would be $98. However, Subodh Gupta of Anand Rathi Commodities believes that topping $100 would take at least a few more weeks, but the long-term view on crude is very bullish. “Crude is presently following the dollar. The credit worries in US could cause some panic in the market, leading to higher crude prices in the next few months,” he said.
With the high crude prices hurting refining margins, the Indian gov-ernment would be compelled to address the issue of Indian refining firms, he added. Si Kannan of Kotak Commodities said that a lot of investors are selling their options and hedging their positions in the futures market.
This implies that there are a lot of open positions in crude indicating the bullishness. During the last week from October 24 to November 1, NYMEX crude had gained by more than 13.6% on rising tensions in the Middle East, declining dollar and supply disruptions in the Mexican refineries.
During the same period MCX Crude for November delivery had gained 12.09% with a rising open interest on the exchange which has almost doubled showing bullish outlook for prices. The Indian prices were marginally buffered from the sharp price rise due to a stronger rupee against the dollar.
Prices have marginally consolidated on correction in the financial markets and on easing of worries, albeit temporarily on the Middle East front. According to MAPE Admisi Commodity Research, in the medium to long-term, crude would remain well supported by winter demand for heating oil, declining stockpiles in US, increased fund buying and a weak dollar.
“In the absence of further intervention by Opec to raise production, the outlook for crude prices is bullish and therefore, we expect crude to hover around $92-100 a barrel in the coming weeks. In the domes-tic markets, crude would be range-bound at Rs 3,600-3,850 a barrel,” said MAPE Admisi Commodity Research’s Debjyoti Chatterjee.
With crude breaching the psychological level of $95 a barrel, the next level to watch out would be $98. However, Subodh Gupta of Anand Rathi Commodities believes that topping $100 would take at least a few more weeks, but the long-term view on crude is very bullish. “Crude is presently following the dollar. The credit worries in US could cause some panic in the market, leading to higher crude prices in the next few months,” he said.
With the high crude prices hurting refining margins, the Indian gov-ernment would be compelled to address the issue of Indian refining firms, he added. Si Kannan of Kotak Commodities said that a lot of investors are selling their options and hedging their positions in the futures market.
This implies that there are a lot of open positions in crude indicating the bullishness. During the last week from October 24 to November 1, NYMEX crude had gained by more than 13.6% on rising tensions in the Middle East, declining dollar and supply disruptions in the Mexican refineries.
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During the same period MCX Crude for November delivery had gained 12.09% with a rising open interest on the exchange which has almost doubled showing bullish outlook for prices. The Indian prices were marginally buffered from the sharp price rise due to a stronger rupee against the dollar.
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