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Pratim Ranjan Bose

Prices may drop to $60-63 a barrel after stabilising around $65-66

Kolkata, May 21

There is confusion over the expected movement of crude prices in the short-term.

While most of the commodity portfolio managers in the country are expecting further melt down in global commodity market in the short term, mostly on technical grounds and profit booking by the global funds, no such clear trend is available for crude as prices are so far guided by a mixture of fundamentals and technical reasons.

In the medium and long term, however, crude is expected to remain bullish.

Bullish trend is also projected for the rest of the commodity market, especially base metals and precious metals that are driven by strong fundamentals.

Mixture of reasons

Mr Naveen Mathur, Head-commodities of Religare Comdex feels that crude prices are currently moving based on a mixture of reasons.

While increased inventory of gasoline is expected to ease pressure on crude, Iran-US face-off is still a cause of concern.

Though he does not rule out a possible drop in crude prices, no clear trend is projected for the immediate future.

The dominant view, however, is the profit booking and appreciation of dollar would impact the asset class commodities. In effect, crude may be range bound and come down to $60 a barrel in next two months.

According to Mr Ajay Agarwal, chief dealer of East India Commodities, crude will stabilise in the international market at around $65-66 in the immediate future, followed by a drop to $62-63 a barrel.

Support price

In Indian futures market Mr Agarwal projects the support price at Rs 3,200 a barrel for WTI crude at MCX for the June contract. The support price for brent futures at NCDEX is projected Rs 50 higher.

Mr Anuj Gaur, analyst of R R Commodities, also feels that crude will be range-bound in the short term and may even go down to $55 a barrel. Overall in a three to six months time gap, crude will be ranging between $60 and $75 a barrel. There is, however, a difference of opinion on future corrections in the commodity market. While Mr Agarwal is of the view that the meltdown has just began and a larger correction is expected in next few weeks, both Mr Gaur and Mr Mathur feel that the corrections are largely over.

Impact on real estate

According to analysts corrections in commodity market may lead to melt down of real-estate prices. Since real-estate market is less liquid in nature such corrections may only be reflected in a time gap. According to Mr Agarwal, real estate prices may be impacted in a gap of two to three months.

More Stories on : Petroleum | Outlook | Commodity Markets

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