Live: Crude Oil Prices Slip 4% Overnight, Trading Near A 6-Month Low | Commodities Corner

A fine balance struck between the Middle East conflict, concerns about global demand and rising supply from producing countries has helped crude oil on a slippery ground with a marginal turnaround.

Oil prices edged up on January 9, partially recovering from the decline in the previous session. Brent crude futures increased by 18 cents, reaching $76.30 a barrel, representing a 0.2 percent rise, while the US West Texas Intermediate (WTI) crude futures saw a gained 0.1 percent, or 6 cents, to $70.83 a barrel. The two crude oil benchmarks lost more than 3 and 4 percent on January 8 following significant price cuts by top oil exporter Saudi Arabia, and an increase in output by the Organization of Petroleum Exporting Countries (OPEC). Catch Manisha Gupta in conversation with Ajay Kedia, MD, Kedia Advisory with more details.
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Oh Hey guys you’ve joined us live at money control I’m Anisha Gupta and we’re looking at the crude oil prices because the last 24 hours have seen a very sharp Savage cut coming for the crude oil prices to the tune of 3 to 5% as well

Well we did see prices gain up by 2% in the previous week but with the current decline now we are trading to nearly 6month lows for the crude oil prices so for 2024 we’ve turned turn into negative by time this is because Saudi Arabia has cut the official price to Asia to the

Lowest in 27 months the cut has been to the tune of 1 and a half to $2 there in the meanwhile OPC also has seen an output increase by 70,000 barrels per day in December the US rig count is expected to continue and there are higher outputs from African countries

Like Angola Nigeria even Iraq for that matter and that has pulled the prices down in addition to that there is concerns about uh while there are concerns about Israel and Hamas War and Red Sea concerns syia output but all of this has not led to a decline in crude

Output yet and the markets are staring at a higher gas inventory and distillate demand in US is the lowest since 1999 so the concern clearly coming in in sense of demand and Supply mismatch there the street also is digesting the us non-farm payroll data which was higher than the

Expectation telling you that the rate cut for the first quarter in 2024 perhaps may not happen the markets are now waiting for the eia short term Outlook report for oil and gas that’s comes in today the OPEC meeting is on 1st and Feb but there is lots of other

Data also coming in for this week including the US inflation PPI and the FED official speeches and then you also have inflation data coming in from India Australia and China there is new unan La loans that the street is waiting for as well and then there is China trade data

So there’s lots of stuff coming in for this week which will tell you on what way are the prices moving let’s get a sense on what to make of all of these events we have with us AJ K of Kia Commodities AJ hi thank you so much for

Joining us uh to start with the kind of decline that we’ve seen in crude oil prices at these current levels what’s your sense are further lower lows in picture uh very good afternoon M uh definitely if you see prizes yesterday went down almost 27th month low we have

Tested uh WPI trading very near to $70 whereas Brent is closer to 7576 Zone I think everything has been discounted we have seen since October when the prices for Brent has tested 94 despite geopolitical is on its peak we have seen continuously fall in prices no doubt extreme statements from Goldman say last

Week has came that prices could double if this conflict would continue to be there but no sign of demand as of now picking up in fact OPAC production for December month is showing a 70,000 Barrel that has improved despite Saudi continuously focus on production cut even from us side we have seen Supply

Production has improved around 13.3 million Barrel so I think supply side is been quite there and as per the last data that quarter 1 for 24 is going to be on a surplus side all this contribute this current fall maybe uh if you talk about the level we have seen $70 Mark

For WP is acted as a very strong support in past in December month also we have test at 70 and then we have seen a bounce back so I think technically Market has been overdone with all these stories for supply side we have done I think today uh tonight there will be a

Short-term Outlook would get some support in the prices on technical ground but overall I think events are quite big we have to watch for new outcome but as of now we feel unless and until $80 Mark doesn’t break WP there is a high probability we can see a little

Bit bounce to the level of 7250 73 same kind of support support around 75 for brand is expected even on domestic Market since last couple of month we have never seen prices holding below 5800 level mark on MCX so I think 5862 is probably a new Range as of

Now unless until some new event doesn’t come I think a bounce can be expected in next couple of days okay so I mean as you said it’s going to be at $8 to $10 of range that the crude prices might be looking at when it comes to Trading

Within Indian markets as well a we’ve seen options and Futures both tend to do quite well so if there a strategy that you would want to make for this week looking at the uh data heavy week that this is going to be what would that be uh truly on future side I think

Market has overdone its weakness so I think 5800 will be acting as a very strong uh support as know for future Trader I think one should try to take long position around uh 5880 with a stop loss below 57 780 and could be a bounce for this week near to 6150 on higher

Side whereas for option also I think 5900 call would be the Preferred Choice to buy we can see a limited upside in 5900 call H um are talking slightly longer term right now and uh the markets are looking at an interest rate cut now not in the first quarter but in the

Second quarter how much of an impact would that have I think whatever we were expecting in the month of November that should be a rate cut from the March onward that has already been discounted now if you talk about CME fed to last week it was around

72.8 but now it has dropped down to 62.4 that clearly suggest that even in next there is a low probability that we can see a rate cut in the March that is why despite dollar Index is dropping below 102 we have seen fall in uh gold prices

Or crude prices so I think uh rate cut in March has been already been Market had digested that won’t be any rate cut in March maybe from April onwards we can see that is why I think interet that concerns what we have already seen for dollar has been

Discounted in the market I’m not expecting that could impact crude as of now we’ve seen a 10% decline in crude prices in 2023 we’ve started 24 on a weaker note as well how would you look at the trajectory of crude going forward we look into the last week statement from Goldman says definitely

There is a chalk point in Swiss canal and we have seen this conflict yesterday I think from us side also there was a statement that if this uh tension will continue that will impact the regional teritory more so I think if this ongoing concerns would be that definitely prices

Will get support from the US side they were expecting $70 to refill their SP holding to I think they have achieved that level so I think we are bottom of the prices for 24 we don’t expect prices to go or hold below $70 Mark for WP I

Think 68 69 could be the supporting part for WP but higher side it’s totally open looking to the consumption demand also because in last uh second half of 23 we have totally uh China was been totally in only so I think in 24 if China start picking up I think demand should improve

And supply side already we have seen concerns in there so I think for first half of 24 we expecting prices can create a Bas near to 6870 for WTI but Higher Side uh we keep open for a level like $85 $86 can be achieved a final

Question then and a when we start a new year the second week of January is always about allocations and weightages within asset classes into Commodities as well how have you seen the kind of buildup that has come in from cftc or the conversations with the global Banks uh def definitely first month is

Going to be very important if you look for ratio like G gsci versus SNP still it is on a lower side which suggest the allocation in commodity should be there because already the valuation side Equity valuations have been quite high on this side so I think there is a slow

And steady built up in precious metal we have seen base metal up till now not given any signal but for energy Market I last week data suggest there was a not so much Improvement in buying but I think looking to the overall factor I think energy could be the preferred Peak

As of now for crude oil and then precious metal and last would be the bease metal all right so that really seems to be the ranking a as always thank you so much for joining us so January always has been very important in sense of allocations within the

Commodities and as a says it is going to be energy precious metals and metals in that category and if you are taking a call on commodities for investing that is the way perhaps to go Now but