Crude oil up on demand prospects: steep rise in margins on MCX

Margin now fixed at 100%, with Rs 95,000 per lot as absolute minimum. So if crude falls below Rs 950, the margin will continue to be based on the price of Rs 950

After wide volatility in the last two weeks, MCX Clearing Corporation raised margins for the crude oil contract, focusing more on the sale-side margin.

This has resulted in a price increase in crude oil with support from international prices, which also went up. At 11.30 pm on Wednesday, MCX crude oil futures were trading at Rs 1,183 per barrel, up 17.7 per cent from Tuesday’s close. On Nymex, WTI crude oil — the benchmark for the MCX — was trading at 25.2 per cent higher at $15.45 after reports of some European nations, Australia and New Zealand lifting lockdown leading to increase in oil demand.

The new measures by MCX include an increase in additional margins on crude oil futures contracts based on the price movement in the market. An initial margin of 100 per cent will be levied for all existing and soon to be launched crude oil contracts. 

According to the MCX circular, an additional margin of Rs 100,000 per lot shall be levied on near month crude oil futures contracts and on the short side of near month crude oil options contracts. Further, an additional margin of Rs 50,000 per lot shall also be levied on all other crude oil futures contracts and on the short side of crude oil options contracts.