Crude may trade between $62/bbl and $74/bbl

Crude prices is trading at 16-months low below USD 70/bbl ahead of the most important OPEC meeting. In near-term crude may trade between USD 74/bbl on the higher side to USD 62/bbl on the lower side.

 

Here is a verbatim transcript of Manisha Gupta comments on CNBC-TV18. Also watch the accompanying video

 

The Reuters-CRB index has declined 4.5% in the markets yesterday and is now trading at a four and a half years low. That shows how much of a decline we have seen across the 19 commodities that the Commodity Research Bureau really tracks.

 

Crude prices is trading at 16-months low below USD 70/bbl ahead of the most important Organization of the Petroleum Exporting Countries (OPEC) meeting, which the whole world is waiting for. One million barrel of a daily cut has already been factored in by the prices by the market, and if OPEC does not deliver anything more than that you would see the slide in crude prices continue.

 

One might see a knee jerk reaction into the prices that might support but in the longer-term markets would continue to watch the equity market, also the dollar strength, which is trading at 2-years high against the major basket currencies and also the demand, which has continued to decline. The US demand has gone down by 8% YoY and the latest Asian numbers that have come in also show demand decline by 27% in the month of September, and inventories on the other side have continued to gain on the higher side. So a very near-term range happens to be between USD 74/bbl on the higher side to USD 62/bbl on the lower side.

 

In case of Gold have seen sell off. Gold has not been immune to that sell off as well and we have seen prices come down quite sharply. In one fortnight gold have come down from USD 930/oz to USD 710/oz below that at this point in time.

 

The strength in US dollar, the weakness in crude prices and because all the commodities are being sold there is no inflation fear and thus, no reason to buy gold and that is what is taking the prices down.

 

Apart from that investors who had bought gold are selling it to cover losses in other markets and that also is weighing on the prices USD 725/oz was an important level for the lower side and since we have breach that now USD 695-650/oz are the kind of levels getting to hear in the markets.