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Informist, Tuesday, Jun. 3, 2025

 

By Ashutosh Pati

 

MUMBAI – After rising nearly 3% on the first day of trading in June, crude oil prices are likely to move in a range for the rest of the month but with a positive bias as market participants factor in rising intensity of war between Russia and Ukraine, talks about a nuclear deal between Iran and the US, and increase in supply by the Organization of the Petroleum Exporting Countries and its allies.

 

As per the median of estimates from nine broking firms polled by Informist, the June crude oil contract on the Multi Commodity Exchange of India is seen in a range of INR 5,100-INR 5,700 per barrel this month. The July contract of West Texas Intermediate crude on the New York Mercantile Exchange is seen in a range of $58.0-$66.8 per barrel during the month.

 

"...prices will trade in a range as long as $62-$65 per barrel zone is intact," said Deveya Gaglani, senior research analyst-commodities at Axis Securities. At 1828 IST, the June crude oil contract on the MCX was up almost 1% at INR 5,422 per barrel. The July WTI contract on NYMEX was up 1.4% at $63.40 per barrel.

 

Ukraine on Sunday launched drone attacks on four military airbases inside Russia, destroying more than 40 warplanes. "...so prices got some support because of the nuclear tension after Ukraine attacked the Russian airbase, but I feel that the spike (in prices) will be short lived," said Gaglani. "It'll be temporary as long as we don't see any major escalation between both the countries. The war is going on for more than two years, and it's already been discounted," he added.

 

Further, several US senators are pushing for stricter sanctions against Russia, suggesting 500% tariffs on imports from countries that buy Russian oil. Talk about a nuclear deal between the US and Iran appear to be fading as media reports suggest Iran is going to reject US' proposal. "Iran is drafting a negative response to the US proposal, which could be interpreted as a rejection of the US offer," a senior diplomat, who is close to Iran's negotiating team, was quoted as saying by Reuters.

 

Meanwhile, the International Atomic Energy Agency said in a confidential report viewed by The Wall Street Journal that Iran has continued to produce highly enriched uranium over the past three months despite talks between Washington and Tehran on a new nuclear deal. "...right now the (oil) market depends more on what happens in between Russia and Ukraine, as well as between Iran and Israel. So geopolitical risk being here is cushioning the huge supply overhang which is there in the market," said Anindya Banerjee - senior vice president, commodity currency, Kotak Securities.

 

On Saturday, eight member nations of OPEC and its allies -- Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman -- agreed to continue to increase production by 411,000 barrels per day for the third consecutive month in July. This is equivalent to three monthly increments and will see key member states Saudi Arabia and Russia increase production. These nations had announced gradual unwinding of the voluntary production cuts in March.

 

Saudi Arabia, the de-facto leader of the cartel, has been pushing for the output hikes to regain market share and punish nations who have been producing more oil than their allotted quotas such as Kazakhstan and Iraq. A few months ago US President Donald Trump had asked OPEC and its allies to lower oil prices and increase production. The cartel and Trump often clashed in his first term when he demanded that OPEC raise crude oil output to compensate for the fall in Iranian supply on account of US sanctions.

 

"OPEC+ also apparently does not want to lose any more market share to shale oil producers in the US and is also fulfilling the demand of US President Trump, who had called for OPEC+ to increase oil production," Carsten Fritsch, commodity analyst at Commerzbank, said in a report.

 

While weak economic data from the top oil consumer China has kept some analysts worried about demand, others expect a slight rise in demand during the summer months. "The current supply shortage in the US, which is reflected in low inventories, is likely to play a role here. In addition, the seasonally higher demand in the summer months could provide short-term support," Fritsch added.

 

Following is a summary of the poll by Informist on crude oil prices for June and details of the estimates by respondents:

 

Brokerage	MCX support (in INR)	MCX resistance (in INR)	NYMEX WTI support ($)	NYMEX WTI resistance ($)
Axis Securities	5,100	5,500	60.0	65.0
Kedia Advisory	5,040	5,720	58.4	66.8
Kotak Securities	5,100	6,100	58.0	68.0
LKP Securities	4,800	5,700	57.0	66.0
Motilal Oswal Financial Services	5,100	5,500	60.0	64.0
Nirmal Bang	5,180	5,620	55.0	74.0
Prithvi Finmart	5,050	5,600	58.0	68.0
Reliance Securities	5,100	5,700	57.0	66.0
Ventura Securities	4,890	5,750	57.9	67.0
Median	5,100	5,700	58.0	66.8

 

End

 

US$1 = INR 85.59

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

With inputs from J. Navya Sruthi

Edited by Ashish Shirke

 

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