Crude jumps 26% on MCX, bullion gains on hope of end to Saudi-Russia rift

The two nations are meeting next week to work out a possible output cut

Crude oil prices jumped 26 per cent in late afternoon trade on the Multi Commodity Exchange (MCX), on Friday. This followed the move in global markets on hopes of an end to the price war between Russia and Saudi Arabia with their agreement on an output cut. The countries are scheduled to meet next week.

The benchmark crude oil futures for delivery in April hit several upper circuits, to trade with an overall gain of 26.03 per cent at Rs 2,043 a barrel on Friday. With almost similar gains, Brent crude surged to trade at $30 a barrel in the international markets, on an improvement in overall sentiment after US President Donald Trump tweeted on Thursday that he had spoken to authorities in both Saudi Arabia and Russia about an output cut.

The fight between the two crude oil-rich nations has resulted in a two-third decline in prices over the last three months, to hit the lowest level since 2016. 

Along with crude oil, bullion and base metals also rose, albeit marginally. Gold for delivery in June jumped 1.11 per cent to trade at Rs 43,722 per 10g, while silver futures for May delivery surged 3.4 per cent to Rs 41,227 a kg. Copper, zinc and other base metals futures for near-month delivery rose by almost 1 per cent, amid global demand woes.

MCX iComdex composite jumped 3.9 per cent to 8,549.27 in late afternoon trade on Friday. 

 

“Crude oil prices led the jump in bullion and base metals on Friday, amid hope for an agreement between Saudi Arabia and Russia. Gold is getting some investor interest, as global central banks continue to add gold to their existing holding as a hedge against economic uncertainty. Silver and base metals have risen on short covering,” said Gnanasekar Thiagarajan, director of Commtrendz.

“Crude oil demand has declined by nearly a third in the last one month. Global markets are flushed with supply of around 30 million barrels,” said Kishore Narne, associate director, at Motilal Oswal Financial Services.

Standard gold in Mumbai’s Zaveri Bazaar gained 1 per cent to close at Rs 43,760 per 10g on Friday, against Rs 43,300 per 10g on Thursday. Silver prices gained 2 per cent to close at Rs 40,310 a kg on Friday, as compared to Rs 39,250 a kg on Thursday.

Even if OPEC and non-OPEC members arrive at a decision to cut 10-15 million barrels of output, the market will remain surplus with 15-20 million barrels of its total production of 98 million barrels a day