Crude oil prices fell on Friday as markets took note of weaker equity and also concerns over growth in Chinese economy. At the end of the day, oil prices stood Rs 6,169 per barrels a tad higher than the closing on previous day. Our MCX markets adjusted with the movement in the rupee though on the other side WTI oil futures prices came down by near 0.7 percent at $97.50 per barrel. While prices continued to get support from the ongoing winter season demand in the US, extended supply pressure from the country and mostly weaker set of economic cues from two major global consumers US and china was the major reason for this drop.
During the early trade on monday, March delivery NYMEX contract lost moderately, falling for the second day after a manufacturing data in China, the world’s second largest consumer of oil slipped to a six-month low. Government backed PMI number stood at 50.5 just managing to stay above contraction territory.
Overall as also stated in our weekly report we continue to watch the movement in oil over next few days amidst the concerns over demand from EM's. This should also be added with the fact that prices have moved higher by over 7 percent in last three weeks. In the current week, Chinese and some other Asian markets would remain shutting due to their new year.
For the day, we might see lower participation in trading during the Asian hours however manufacturing PMI numbers in EU and US would be the key determinant for trading direction. We feel volatility, particularly in the evening hours could be high though are maintaining our selling bias.
Intraday traders are advised to initiate shorts on pullbacks. At the local market Indian rupee at present is trading at 92.95 up against the US Dollar, so we believe more selling pressure on oil prices could be noticed in the local market. Today is the day to know about the global Manufacturing activties and their performance.
We have PMI manufacturing number from India, Germany, Euro-zone, UK, and the US. So we believe market may remain highly volatile today for select commodity and oil prices.
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