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By Jigar Trivedi
WTI crude futures ended the previous week down more than 3% and closed at $104.79 per bbl. The oil market has been very volatile in the past few days as investors continue to weigh prospects of slowing fuel demand even as supply remains tight. A covid resurgence in China also prompted sell-off on fears of more lockdowns in the world’s top crude importer. Demand concerns rose as major central banks across the globe are determined to rein in inflation with aggressive rate hikes, which might weigh on spending and fuel demand.
Meanwhile, US Crude oil inventories rose 8.2 million barrels for the week ended 1st July, while much of that inventory came from the SPR release of 5.8 million barrels. Money managers have decreased their bullish Nymex WTI crude oil bets to the least in 2 years, by 42,354 net-long positions to 200,957, weekly CFTC data showed.
MCX crude oil outlook
Crude oil might be under pressure for the week, amid demand concerns from major consumer China coupled with recession fears owing to aggressive central bank tightening, given the backdrop of the decade’s high inflation. The prospects of another round of lockdowns in China overshadow signs of a tightening market. On Sunday, Shanghai reported its first case of the highly infectious BA.5 omicron sub-variant and warned of ‘very high’ risks.
On the supply side, the market remains nervous about plans by Western nations to cap Russian oil prices, with President Vladimir Putin warning further sanctions could lead to “catastrophic” consequences in the global energy market. Oil flow through the CPC pipeline is also under question as the key export route for Kazakh oil risks being suspended as it appeals a Russian court order for it to temporarily shut down. Meanwhile, the surging dollar index ahead of US CPI data due this week also dampens the mood. We expect MCX Crude oil July futures to decline towards Rs.7,750 per bbl for the week.
(Jigar Trivedi, Manager — Non-Agro Fundamental Research, Anand Rathi Shares & Stock Brokers. Views expressed are the author’s own.)
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Image and article originally from www.financialexpress.com. Read the original article here.