Crude prices to stabilise near $85/bbl: Commtrendz

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T Gnanasekar , Director, Commtrendz , crude prices will depend on how OPEC is going to react to an output cut, which is being expected. "The way prices are falling and recessionary fears are looming, I doubt this output cut would happen. So, prices would kind of stabilize near the USD 85 per barrel range. I don't think it is going to drop much either. At the same time, even the upside is going to be limited to USD 93-94 per barrel."

 

Excerpts from CNBC-TV18's exclusive interview with T Gnanasekar:

 

Q: At USD 881/oz, what would you do with gold ? Are you seeing more weakness, or do you think it will once again be able to spurt above the USD 900/oz mark?

 

A: It depends on how the dollar spans out from current levels for direction. The two key factors that investors need to keep in mind is the US recessionary fears and the recent moves by China to curb their rise in commodity prices. Though it has done so only in agricultural products, it might happen across the board on other commodities as well. So, these are the two negative factors one needs to keep in mind.

 

Gold at USD 881/oz looks slightly better compared to what it was a couple of days back for people who had lost out or missed the bus. There is some more downside left because there is going to be a lot of volatility based on headline driven news on the dollar. So, my sense is, it could go to USD 867/oz and find a good bottom there for a reversal up to USD 930/oz again.

 

Q: So, it would be more like a buy on dips?

 

A: Yes, it would definitely be a buy on dips because underlying fundamentals clearly remain positive on the back of a weakening dollar and weakening US economy.

 

Q: What is your take on crude?

 

A: Crude prices will depend on how OPEC is going to react to an output cut, which is being expected. The way prices are falling and recessionary fears are looming, I doubt this output cut would happen. So, prices would kind of stablise near the USD 85 per barrel range. I don't think it is going to drop much either. At the same time, even the upside is going to be limited to USD 93-94 per barrel.