Oil prices fell by more than 1.5 per cent on August 8 after data showed that China’s imports and exports fell much more than expected in July in another sign of a sluggish post-COVID rebound for the world’s largest oil importer. In India, fuel consumption slipped to a 10-month low in July, government data showed on Tuesday, as the monsoon rains restricted mobility. India is the third-biggest oil importer and consumer.
Brent crude futures were down $1.41, or about 1.7 per cent, at $83.93 a barrel. US West Texas Intermediate crude was down $1.46, or about 1.8 per cent, at $80.71. WTI fell by $2 earlier in the session.
Back home, on the Multi Commodity Exchange (MCX), crude oil futures due for an August 21 expiry, were last trading lower by 0.75 per cent at ₹6,755 per bbl, having swung between ₹6,629 and ₹6,805 per bbl during the session so far, against a previous close of ₹6,806 per barrel.
What’s driving crude oil prices?
China’s July oil imports were down 18.8 per cent from the previous month to the lowest daily rate since January, but still up 17 per cent from a year earlier. Overall, China’s imports contracted by 12.4 per cent in July, far steeper than the expected five per cent drop. Exports fell by 14.5 per cent, compared with a fall of 12.5 per cent tipped by economists.
Vivek Dhar, mining and energy commodities strategist at Commonwealth Bank of Australia told news agency Reuters that last week’s decision by Saudi Arabia to extend a voluntary output cut of 1 million bpd into September, despite Brent rising above $80, suggests that the oil kingpin may be targeting a higher price than $80.
However, some analysts are still skeptical about how much supply the cuts are actually taking off the market, as the other members of the Organization of the Petroleum Exporting Countries such as Libya and Venezuela have increased production, said Andrew Lipow, president at Lipow Oil Associates in Houston, according to Reuters.
Technical View
‘’The pro growth stimulus measures in China, Saudi Arabia and Russia’s announcement that they would extend voluntary supply cuts through next month, and an improved economic outlook in the US is expected to provide support this week,” said domestic brokerage firm Religare Broking in its weekly report for metals and energy.
Religare Broking has given a ‘buy’ for MCX Crude Oil at a target price of ₹6,950, in the initiation range between ₹6,720 – ₹6,740 at a stop loss of ₹6,620.
‘’The commodity in the last two weeks has gained by 10.40 per cent roughly and there is no deviation from the upward trend. Having said that, there is a strong hurdle between 6,950-6,980 for the bulls. Therefore, the upside target should not extend beyond this range. Buying recommended at every dip, unless crude oil closes below the 6,630 support level,” added the brokerage.
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Updated: 08 Aug 2023, 09:33 PM IST