Covid, higher OPEC production hits crude oil prices; avoid entering at current levels, go long at Rs 5850/bbl
Oil prices got off to a weak start to the year as the IMF forecasted a third of world’s economies could sink into recession this year. The fall in crude oil prices can also be attributed to profit booking after crude rallied from 6000 to 6700 one way. The IMF spoke of slowing economies in the United States, Europe, and China, compounded by China raising its export quotas for refined fuel which is a sign that the world’s largest oil importer could be expecting weak domestic demand.
The increase in Covid cases is also a concern for crude bulls as with rising cases, travel growth would also come to halt. We already had seen travel disruption during the heavy season of traveling during Christmas due to a snowstorm and now with the world’s biggest migration coming in the form of Chinese New Year, rising cases of Covid could curtail that.
