Domestic crude oil futures declined on Monday, tracking weak spot demand and subdued global cues. On the Multi Commodity Exchange (MCX), the January contract fell by Rs 60, or 1.12%, to Rs 5,280 per barrel, with a turnover of 1,433 lots. The February contract also declined by Rs 53, or 1%, to Rs 5,250 per barrel, with a turnover of 106 lots.
Global Market Influence
Analysts attributed the fall to weak demand in the spot market and lower international crude oil prices. On the New York Mercantile Exchange (NYMEX), West Texas Intermediate (WTI) crude oil for February delivery declined by 0.48% to $76.20 per barrel. Similarly, Brent crude oil for March delivery on the Intercontinental Exchange (ICE) fell by 0.44% to $81.30 per barrel.
Factors Behind the Decline
The decline in global crude oil prices was due to concerns over demand from major economies and an increase in supply from some producers. The Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, are expected to meet later this month to discuss production levels. Market participants are also watching the impact of the Omicron variant on oil demand.
In the domestic market, the rupee weakened against the US dollar, making crude oil imports more expensive. However, the fall in international prices outweighed the impact of a weaker rupee.
Outlook
Analysts expect crude oil prices to remain volatile in the near term, tracking global cues and developments related to the pandemic. The MCX crude oil futures are likely to find support at Rs 5,200 per barrel and resistance at Rs 5,400 per barrel.
