Angel Broking sees crude falling further to $46/bbl

By: | Published: March 10, 2017 4:14 PM

Angel Broking expects crude oil prices to drop to $46 per barrel, extending the fall from a three-month low of about $49.56 per barrel, as the high US inventories, increasing rig count, strong dollar index and speculative positions weigh in.

Angel Broking expects a fall of Rs 150-200 per barrel in the price of oil in the Indian markets from the current market price of Rs 3,310 per barrel. (Image: Reuters)

Angel Broking expects crude oil prices to drop to $46 per barrel, extending the fall from a three-month low of about $49.56 per barrel, as the high US inventories, increasing rig count, strong dollar index and speculative positions weigh in.

“Oil prices which have been trading in a narrow range of $3 for most of 2017 has finally been taken off as prices declined heavily in the past two trading days of the last fortnight,” Prathamesh Mallya, Chief Analyst – Non-Agri Commodities & Currencies, Angel Broking, said in a note.

“The supply side dynamics in oil markets have ensured that bears have taken the prices down to the 3 month lows,” Mallya said, adding, “High oil inventories in the US at around 528 million barrels, increasing rig counts in the US, and stronger dollar index are push factors for oil prices correction in recent times.”

Mallya expects further downward pressure on oil prices, given the positions held by fund managers. “Speculative positioning of fund managers also indicates liquidation which is a sign of further bearishness in the oil counter,” he said, adding, “We expect this fall to continue further towards $46 mark in the coming trading sessions.”

Further, Mallya said he expects a fall of Rs 150-200 per barrel in the price of oil in the Indian markets from the current market price of Rs 3,310 per barrel. “The price can move down lower towards Rs 3,100 per barrel-mark,” Mallya said in the note.

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Earlier Friday, crude prices inched up after dropping to their lowest in more than three months the session before, on concerns that a global supply glut will persist. US West Texas Intermediate crude (WTI) fell below $50 on Thursday for the first since mid-December, when OPEC and other producers agreed to cut output.

WTI is on track for a 7 percent decline this week, the biggest weekly drop since early November. Brent is heading for a 6 percent fall, also the biggest since early November.

Market confidence has taken a hit after a period of higher prices enticed more U.S. shale oil companies to drill more wells and as stockpiles have remained high.

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