Crude oil futures slid over 1.7 per cent in the domestic market on Monday as investors and speculators exited positions in the energy commodity amidst fears that a slowing global economy may curb the demand for the fuel.
A surprise rate cut by China on Friday and speculation that the country may be shying away from its 7 per cent official economic growth target for 2015 signaled a gloomy demand outlook for the fuel, spooking oil traders. The People’s Bank of China on Friday cut interest rates for a sixth time since November as the key lending rate was slashed by 25 basis points while the reserve requirement ratio was cut by 50 basis points. Meanwhile, sales of new homes in the US plunged to the lowest level in ten months in September while a regional factory gauge shrank, signaling a slowdown in the world’s biggest economy, darkening the demand outlook for the fuel. US new home sales slipped by 11.5 per cent to a 468,000 annualized pace in September from the prior month. The gauge measuring manufacturing activity in Dallas fell to -12.7 in October from -9.5 in September, with a reading below 0 signaling contraction. Meanwhile, a deceleration in the fall in the weekly US oil rig count signaled an end to the US production slowdown, threatening to aggravate a global supply glut. The number of rigs drilling for oil in the US fell the least in eight weeks, down by 1 to 594 in the week ended October 23, Baker Hughes said.
Oil may trade on a cautious note today ahead of key US data including durable goods orders, home prices, services PMI and consumer confidence, which may shape the demand outlook for the fuel in the world’s biggest oil consumer.
At the MCX, Crude oil futures, for the November 2015 contract, closed at Rs 2,877 per barrel, down by 1.71 per cent, after opening at Rs 2,930, against the previous close price of Rs 2,927. It touched an intraday low of Rs 2,870.
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