Crude oil price rise: Markets speculate low supply

Crude oil price rise on Tuesday came across with speculation that the future supply may be hit gradually, especially in the United States. At Record price, Brent crude oil went up by 20 cents at $51.86 a barrel by 0930 GMT. U.S. light crude was 15 cents higher at $47.52.

Market analyst, Fawad Razaqzada at futures brokerage said that the US crude oil stocks have been falling consistently in recent weeks.

“If the downtrend in oil inventories is maintained, then a bullish case can be made for oil, especially given the ongoing supply restrictions from OPEC and Russia,” Razaqzada added

A 13% fall has been recorded in the US commercial crude inventories from their March figures, to 466.5 million barrels.

In addition, Organization of the Petroleum Exporting Countries and non-OPEC producers including Russia have pledged to hold back around 1.8 million bpd of output between January this year and March 2018 in order to tighten supplies which would eventually lead to rising prices.

Whereas on the contrary, oil production elsewhere has been rising, blunting the impact of output cuts by OPEC and its allies.

With a record crude production in US breaking 9.5 million barrels per day (bpd), its highest since July 2015. Some analysts say that output growth may slow down as energy corporations cut a number of rigs drilling for oil. However, the rise in production has been relentless with increasing volumes from shale, significantly from the enormous Permian basin in Texas and New Mexico.

“With U.S. shale oil production proving more than resilient, the autumn period presents a lot of downside risk to oil prices,” Harry Tchilinguirian, chief oil market strategist at French bank BNP Paribas, told Reuters Global Oil Forum.

To see if the recent downward trend in US stocks continues; the weekly data on US inventories have to be tracked which starts later on Tuesday. According to a Reuters poll, U.S. crude inventories are expected to fall for the eighth week in a row and drop by 3.4 million barrels

Hans van Cleef, senior energy economist at ABN AMRO Bank NV in Amsterdam said, Another decline in US crude stocks may lead to somewhat higher prices again, though the upside may be limited – especially if U.S. crude production ticks higher again.




Onions and potatoes to come under Essential Commodities Act

New Delhi: With prices of onions and potatoes touching the sky, the Cabinet Committee on Economic Affairs on Wednesday has decided to bring both the two important commodities under the purview of stock holding limits under the Essential Commodities Act, 1955.

Representative image. Image courtesy:
Representative image. Image courtesy:

The Essential Commodities Act, 1955 has been enacted to make sure that the consumers have easy access to commodities without falling prey to exploitation by underhand traders. This inclusion will give power to the State Government to tackle problems of hoarding and curb prices of onions and potatoes as per local conditions.

In the view of rising prices, the Control Orders will help State Governments to undertake effective de-hoarding operations under the Essential Commodities Act, 1955 by stipulating licensing requirements and stock limits. Union Minister Ravi Shankar Prasad said, “We hope that state governments will be able to deal effectively with the problem of hoarding. They have been directed to crack down on hoarders and we hope that this move will empower states over the hoarding issue,” he said.

Various Ministries and Departments of the Central and State Government have issued Control orders for regulation of production, distribution, price, etc pertaining to essential commodities under the Essential Commodities Act, 1955.

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