Home / Economy / Crude prices fall over concerns of recession

NEW DELHI : Crude oil prices declined on Tuesday amid concerns of a global recession.

Continuing restrictions in several major cities of China also dampened the market sentiments, analysts said.

A report by Kotak Securities said that market players are still sceptical as Beijing  remains under restrictions because of recent rise in cases. It also said that crude oil is getting affected by volatility in financial market as market players assess implication of monetary tightening by major central banks.

It, however, noted that expectations of pick up in Chinese economic activity as virus-related restrictions are being lifted in Shanghai, more measures are being to support the economy and as US considers revising the trade tariffs imposed during the Trump administration.

Rahul Kalantri, vice president for commodities, Mehta Equities also noted that China continues to struggle with rising Covid cases leading lockdown parts of major cities in the world’s second-largest economy. The struggle faced by the European Union to reach an agreement on imposing an embargo on Russian energy imports also weighed on the oil prices, he added.

Around 4 pm, the July contract of Brent on the Intercontinental Exchange was at $112.93 per barrel, lower by 0.43% from its previous close. Similarly, the West Texas Intermediate on the NYMEX fell 0.51% to $109.73 per barrel.

The Indian basket of crude comprising Oman, Dubai and Brent crude, was last recorded at $110.98 per barrel on 23 May.

Despite the volatility in the crude oil prices, retail prices of transport fuels remained unchanged in India. The price of petrol in Delhi now is 96.72 per litre, while diesel is being sold for 89.62 a litre.

Prices had fallen on Sunday in line with an excise duty cut. A further decline in retail prices is unlikely as crude oil prices are still elevated and OMCs have accumulated under-recoveries, analysts said.

On Saturday, government announced the reduction in central excise duty on petrol by 8 per litre and on diesel by 6 per litre. Following, the Centre’s move, the state governments of Maharasthra, Kerala, Odisha and Karnataka also announced to cut their respective value added taxes.

ABOUT THE AUTHOR

Rituraj Baruah

Rituraj Baruah is a senior correspondent at Mint, reporting on housing, urban affairs, small businesses and energy. He has reported on diverse sectors over the last six years including, commodities and stocks market, insolvency and real estate. He has previous stints at Cogencis Information Services, Indo-Asian News Service (IANS) and Inc42.
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