Medium-term crude seen at $145-151/bbl: Anand Rathi Comm

Kishore Narne of Anand Rathi Commodities said he continues to be long on crude at USD 120 and suggested that everybody can buy crude at this point of time. He told CNBC-TV18 that USD 200 per barrel of crude is not far away. He added that crude is seen at USD 145-151per barrel level in the medium-term. 

Excerpts from CNBC-TV18’s exclusive interview with Kishore Narne:

Q: A CNBC-TV18 poll showed 67% respondents expect crude to top out at USD 150 per barrel What is your view and what are the targets you are setting on crude in the near short-term?

A: In an absolute near-term, I am looking at around USD 130-135 per barrel levels to be a great resistance. At the same time, we are heading towards the summer season which is a peak-driving season in US and across Europe also. So, that could be a bit supportive for crude oil prices. But at the same time anything above USD 130-135 per barrel will eventually lead to some kind of demand destruction. I hope it could really top out for at least medium-term to long-term at around USD 151-145 per barrel levels.

Q: What do you make of Goldman Sachs’ report suggesting that it could touch USD 200 per barrel in the next two years given the super spike mode of the commodity?

A: Probably yes. USD 200 per barrel is not so far away. It took only a couple of years for crude to go from USD 20 to USD 120 per barrel. It might raise that much in two years. We are already seeing global GDP going marginally down. Even India and China are slowing down and there is fear of inflation. So, somewhere around USD 150 per barrel or so we can see some kind of demand destruction. If one does not have any supply side threats then probably USD 200 is a bit of an aggressive target.    

Q: Is the rally on crude just a confluence of events: weak dollar, some political tensions in Iran, supply disruption in Nigeria, hurricane season is definitely coming up and driving season in the United States? Is there some sort of emergence of a general demand-supply mismatch or some ground realities that have come to the fore?

A: Most of the issues listed are perceived reasons. The Nigerian issue is a longer-term issue and there will be supply problems in Nigeria and they will continue to be there. The Iran and Turkey issue is a very short-term issue and will be settled within a month or so. The hurricane season will have around 10-11 hurricanes lined up. But at the same time, it is a very premature guess whether hurricanes are going to disturb the product supplies or not. But they will lead to short-term spikes but not longer-term fundamental change.

Q: Will you go long on crude at USD 120?

A: Yes. I continue to be long and suggest everybody can buy crude at this point of time. On the very short-term, we can see the USD 130-135 mark.