India, along with the US, People’s Republic of China, Japan and the Republic of Korea, has decided to release five million barrels of crude oil from its strategic petroleum reserves in a concerted effort to bring down global crude oil prices. This is the first of a kind coordinated move globally to tame the flaring crude oil prices. Brent, the most popular benchmark in international trade for crude oil, hit $86.40 a barrel on October 26. While prices cooled off since then to nearly $79 a barrel, they rose over three per cent in two days to hover around $83 per barrel-mark after the announcement. While sector watchers say the quantity is not big, the release of five million barrels of crude oil from its SPR is a symbolic gesture on India’s part. On an aggregate basis, too, the release of oil reserves by all the countries may add about 70 million to 80 million barrels of crude supply, smaller than the more-than-100 million barrels the market has been pricing in, say analysts at Goldman Sachs. That said, all eyes now are on the OPEC meeting on December 2 that will set the tone for oil prices. Market watchers fear, the coordinated efforts by oil consuming countries may slow their output increase pace. Going-forward, global crude oil prices are likely to remain volatile given fresh surge in Covid-19 cases in European countries and persisting energy crisis. On technical charts, analysts at Reliance Securities say WTI Crude Oil January may slide up to $77.00-$75.44 level, with resistance seen around $78.80-$79.50 levels. On the MCX, crude oil for December series could see a bearish momentum up to 5,840-5,770 levels.
The resistance, she says, is at 5,920-5,966 levels. Now, coming to Thursday’s equity trading, F&O expiry will largely keep investors on the edge today. That apart, trends in global stock markets, the movement of rupee against the dollar and investments by FPIs and DIIs will sway the indices.