Informist, Tuesday, Oct 12, 2021

By Sayantan Sarkar

MUMBAI – Crude oil prices in India and abroad extended gains today due to tight supply as demand continued to climb on the back of record high power prices. 

* A shortage of coal in China and India has led to several industries switching to fuel-based operations. This has increased consumption of crude oil and the ongoing power crisis in China has also supported prices.

* The pick-up in demand for crude oil comes at a time when the market is already in need of more oil after the Organization of the Petroleum Exporting Countries and its allies decided to stick to their decision of increasing output by just 400,000 barrels per day every month. 

* "The surge in oil prices is more likely attributable to the tight market situation," Commerzbank AG said in a report. "This is also evident from a glance at the forward curves, which are in a state of pronounced backwardation in the case of both Brent and WTI," the German bank added.

* At 1721 IST

  --The October crude oil contract on Multi Commodity Exchange of India was up 0.2% at 6,120 rupees a bbl

  --The November contract on New York Mercantile Exchange was up 0.6% at $81.00 per bbl.

* Rising natural gas prices have encouraged power generators to switch to oil. With winter approaching, demand for heating in offices and homes will pick up, further boosting gas prices.

* Outlook for the evening session:

  --The MCX contract is seen at 5,930-6,177 rupees per bbl

  --The NYMEX contract is seen at $80-$83 per bbl

End

US$1 = 75.51 rupees

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

Edited by Rajendra Masur

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