MUMBAI – Crude oil prices in India and abroad reversed early losses and rose today as investors were optimistic that the Organization of the Petroleum Exporting Countries and allies may extend the current output cuts beyond Dec 31.
The dollar’s weakness against a basket of major currencies also supported prices. A weaker dollar makes commodities priced in the greenback cheaper for holders of other currencies.
At 1708 IST
–The November contract on the Multi Commodity Exchange of India was up 1.6% at 3,097 rupees per barrel.
–The December contract on the New York Mercantile Exchange was up 0.8% at $41.98 per bbl.
The OPEC’s Joint Ministerial Monitoring Committee met late on Tuesday via videoconference and said the resurgence in COVID-19 infections in the US and Europe was overshadowing robust demand from Asia and positive developments around a vaccine. The panel said all the members of OPEC and allies must be prepared to take actions when necessary to balance the market.
The panel, however, did not make any official recommendation to OPEC about the extension of current supply curbs. The cartel’s current output is lower by 7.7 mln bbl per day. The deal runs out on Dec 31.
“In our opinion, however, the alliance will have no choice but to maintain the current production volumes in the first half of 2021 because demand is not likely to recover so quickly,” Commerzbank AG said in a report.
Meanwhile, the American Petroleum Institute reported that crude oil inventory in the US rose by more than 4 mln bbl for the week ended Friday, which dragged down prices earlier in the day. The official US Energy Information Administrations’ inventory data will be released later today.
Outlook for the evening session by Sriram Iyer, a senior analyst at Reliance Securities-
–The MCX contract is seen at 2,990-3,145 rupees per bbl
–The NYMEX contract is seen at $40.57-$42.70 per bbl