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Crude oil futures drop 0.77% to Rs 3,863 per barrel on demand concern

In the futures market, crude oil for February delivery touched an intraday high of Rs 3,860 and an intraday low of Rs 3,828 per barrel on the MCX.

Mumbai / January 28, 2021 / 04:41 PM IST
Source: Reuters

Source: Reuters

Crude oil futures edged lower to Rs 3,863 per barrel on January 28 as participants increased their short position as seen by the open interest. The crude oil prices declined on worries of fuel demand amid restriction imposed by nations to contain COVID-19 outbreak offsetting the huge drawdown in US crude inventories.

The US Energy Information Administration (EIA) reported that US crude inventories fell by 9.91 million barrels for the week ended January 22 as against market expectation of a rise of 0.4 million barrels.

However, supporting the prices was the US Federal Reserve's decision to stick to dovish tone and leave its key overnight interest rate near zero to maintain monetary support until there is a stronger rebound from the pandemic-triggered recession.

“NYMEX crude trades lower near $52.5/bbl pressurized by gains in the US dollar post-Fed decision, the Fed’s downbeat growth outlook, mixed economic data and rising coronavirus cases. However, supporting price is the EIA weekly inventory report which noted a sharp 9.91 million barrels decline in US crude oil stocks. Crude is also supported by reports of some US states easing restrictions. Crude has weakened along with other commodities on the back of the US dollar, but prices may remain supported by a sharp decline in US crude stocks,” said Ravindra Rao, VP- Head, Commodity Research at Kotak Securities.