MCX Crude Recovers Well Above Rs 5200, Sharp Rise In OI

Crude Oil.........

MCX Crude oil futures

are on a recovery track today following the awesome intraday gains witnessed in global prices last night. The commodity witnessed a heavy sell off during the Asian and European trades yesterday as world markets were sent in for a toss due to a combination of forces from US, China and Japan. The commodity had been lingering around six week highs earlier in the week but fell to a low near $92 per barrel yesterday, extending a frantic sell off. However, a smart bounce has been witnessed thereafter as a late rally in Asian stocks supported sentiments. The WTI crude oil futures are trading at $94.29, up 4 cents per barrel on the day.

The US Fed reiterated the stance of the policymakers to put an end to their asset purchases should the economic conditions allow them, sending market down in mid week. Chinese growth worries came back to haunt the sentiments for Asian stocks. China HSBC flash manufacturing PMI for May came in at 49.6, down from 50.4 in April and down from 50.4 expected for May. This is a seven month low back into contraction territory. All of this led to a chaotic run in Japanese stocks yesterday as the Nikkei slipped by more than 7% amid a wild run in government bonds.

US Federal Reserve chairman Ben Bernanke has suggested in his latest comments that the current quantitative easing measures that have been pushing US growth could start to taper off as soon as June. He said the US economy was improving but headwinds including government spending cuts were dragging on the recovery. He said the job market was improving but it remains weak overall and participation rates are still moving down'.

US crude oil inventories remain at a three-decade high and oil would find it difficult to rally much from hereon. The downward bias in Chinese manufacturing could also cap gains. The MCX Crude oil futures for June edged up well above Rs 5200 per barrel and tested a high of Rs 5250 per barrel. The contract trades at Rs 5242, up Rs 27 per barrel or 0.52% on the day with a massive 14% increase in the open interest.

Source by Commodity Insights