Crude to see sell-off towards $118-120/bbl: Commtrendz

Published on Thu, Jul 24, 2008 at 17:12 |  Source : CNBC-TV18

Updated at Mon, Aug 04, 2008 at 18:04  

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T Gnanasekar, Director, Commtrendz Research

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T Gnanasekar , Director of Commtrendz Research sees some kind of a near-term bottom in place for crude . He said, "There are signs that we could pull back right up to USD 128-129 per barrel. We are in a lean season as far as fundamentals are concerned. We neither have gasoline nor heating oil demand. In the absence of demand, stocking will not take place. Therefore, there could be a risk of another sell-off towards USD 118-120 per barrel."

 

He sees a relief rally for gold . He feels that gold will not go beyond USD 938 per ounce to USD 940 per ounce levels from hereon. It will be a strong resistance point and is going to be difficult to cross that, he said.

 

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

 

Q: Starting with crude prices, do you expect more losses to come or do you think consolidation has started already?

 

A: On the technical side, we are looking at some kind of a near-term bottom in place. There are signs that we could pull back right up to USD 128-129 per barrel. At this point in time, it is very difficult to say if it could extend further from there and continue going up because we are in a lean season as far as fundamentals are concerned. We neither have gasoline nor heating oil demand. In the absence of demand, stocking will not take place. Therefore, there could be a risk of another sell-off towards USD 118-120 per barrel.

 

Q: How do you see gold because we have seen very sharp losses? It is down nearly USD 60/oz in the last four or five sessions but is holding USD 920/oz. Are you expecting more losses in gold as well?

 

A: Not immediately. Even gold along with the euro and crude is showing some kind of a possible relief rally, which can be expected now. It will not go beyond USD 938 per ounce to USD 940 per ounce levels from hereon. It will be a strong resistance point and is going to be difficult to cross that.

 

Essentially, all the central banks are making a lot of noise about fighting inflation. It is a big threat for gold and that is why you have seen liquidation take place in gold, and that is the reason why we have seen a good sell-off.

 

But there is a risk of it going back to USD 910 to USD 912 per ounce levels where it should find a good support.

  

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