Crude oil in October 2008 was 36% more than that traded in the previous month.
The futures trading volume increased at the time when Indias crude oil basket prices fell by $32 or 36% during the month of October to end at US$58 a barrel.
Bearish market sentiments were highlighted by the losses on the equity markets, despite various efforts by central banks around the world to safeguard the financial system. The volatility in the equity and currency markets was passed on to the oil markets as conditions in the financial markets worsened, Kavita Chacko, Economist, NCDEX said.
The Indian basket comprises of the Brent dated sweet crude and Oman Dubai sour crude oil in a ration 38.6:61.4. The country meets over 75% of its crude oil requirements through imports. India's crude oil import bill doubled to Rs.1.9 trillion in the first five months of the current fiscal largely on account of record international oil prices.
Crude oil price volatility increased markedly since mid-September with the deepening of the financial crisis- by more than 6% on a day-to-day basis compared to less than 4% in early July. Crude oil prices could be pressured further with the deteriorating economic conditions, she said. Some analysts are of the view that with the weakening of oil prices, there would be a moderation in new exploration investment eventually shrinking supplies.
With the worsening conditions in the real economy affecting refinery investment for 2009 and beyond, the oil markets would be supply deficit when the global economy begins to recover, making room for another rally in prices.