Commodity Talk: Crude oil at multi-month highs. Jigar Pandit suggests dip buying

Brent crude could average $92-$95 for 2024 and MCX prices could test the resistance of Rs 7,300/BBL by end of 2024, says Jigar Pandit, Head Commodity & Currency Business, Sharekhan by BNP Paribas. He advises investors to remain bullish on crude oil, buying the correction.

What impact do you see on the supply side and hence the prices of crude oil from the attacks on Russia’s energy installations?
Jigar Pandit: The amount of Russian refining capacity estimated to be impacted by Ukrainian drone attacks varies, but estimates suggest at least 0.6-0.9m b/d has been affected. While this has provided support to the market, in theory, it suggests that Russian crude oil export availability is likely to increase as domestic refiners reduce run rates. These attacks are more bullish for refined products in the immediate term, which are mostly supplied to European nations.

How is the global oil demand shaping up and what is the price outlook of oil?
Jigar Pandit:The global crude oil market has flipped into deficit as the latest update from EIA has reported 0.9mbpd of deficit in Feb. as global oil demand stood at 102.93mbpd, global oil supply at 101.82mbpd in February 2024. All the leading energy authorities have remained optimistic about the global demand in H2-2024, driven by the Asian countries. OPEC in its latest monthly report mentioned that global demand would rise by 2.2 million bpd in 2024 and a further 1.8 million in 2025. The expected June rate cuts from the US Fed will boost the growth sentiments, hence we expect Brent prices to average between $87-$92 for 2024.

Crude oil prices are at multiple month highs and witnessed some profit booking on Wednesday. Is it time to book some gains?
Jigar Pandit: Crude oil prices are up for the third straight week, while fundamentals remain supportive for the prices to remain higher, but profit booking can be expected in near term. Overall theme in crude oil remains buy on corrections.

Dollar has been strengthening so do you think that could further increase the price for importing countries such as India and dent investment appetite in crude in the near term?
Jigar Pandit: As the US FOMC has indicated a possible three rate cut in 2024, we expect the dollar to weaken, while the demand remains healthy for crude oil from emerging markets and Asia, hence we see crude oil investment will remain stable.

What should be the trading strategy in MCX crude oil futures?
Jigar Pandit: Brent crude could average $92-$95 for 2024 and MCX prices could test the resistance of Rs. 7,300/b by end of 2024. We advise investors to remain bullish on crude oil hence buying the correction is advised.Also Read: Gold Price Today: Yellow metal falls Rs 880/10 grams from lifetime high. Is it time to book profit?

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)