The Hindu Business Line : Crude futures slide 9-10 pc at MCX

CRUDE oil futures have crashed by 9-10 per cent in the last nine trading sessions at the Multi-Commodity Exchange of India (MCX), in line with the international trend.

Crude oil May contracts at MCX fell sharply to end at Rs 2,252 a barrel on Wednesday, down from an all-time high of Rs 2,553 a barrel on April 4. Crude oil June contracts also dropped to close at Rs 2,315 a barrel against an all-time high of Rs 2,553 a barrel on April 4.

After months of touching "all-time" highs of more than $57 a barrel in markets worldwide, global crude oil prices have climbed down over the last one week, with the benchmark Brent closing at $51.30 on Wednesday. But experts believe the good times may not last too long.

At the NYMEX, WTI crude oil prices fell by about $7 a barrel this month on continued selling by hedge funds.

"According to the International Energy Agency, there is a slowdown in Chinese demand. And this seems to be a factor in the fall of crude oil prices," Mr S.K. Joshi, Executive Director, BPCL, told Business Line. "But we are not hopeful of prices coming down to the levels we would wish for — $35 a barrel. We believe prices will remain at these current, relatively high levels," he said.

WTI crude oil prices touched an all-time high of $57.6 a barrel in March, which was only to be rewritten by another wave of bulls that pushed oil prices to $58.28 a barrel in April, despite the OPEC's decision to raise production limits by 500,000 barrels a day.

The sharp upsurge was attributed to strong demand forecasts and supply disruptions. And the last few months have seen the price difference between sweet and sour crude oils narrowing.

"Although prices seem to be falling, we expect this to be a short-term phenomenon. Come June, with the summer season in the Western countries, crude prices may move up. In the short term, prices may stay at lower than the $50 levels," said a senior analyst at an Indian broking firm.

The interest in futures trading of light sweet crude oil on the MCX platform is fast picking up among Indians as the new industry players are entering the market to cover their foreseeable losses, an exchange official said.

The next target would be $50 a barrel (MCX basis May Crude Oil futures contract Rs 2,188), said senior analyst Mr Lalit Sharma.

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