Blessing in disguise for Indian Macros?

Industry Insights
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Markets didn’t do much last week. Typical range-bound play with sector specific news. But something interesting was happening in one space — Crude oil prices

Crude prices have crashed last week

WTI fell -13% and Brent crude too fell 10%+ as rising interest rates combined with easing some of the supply concerns along with slowdown in demand from china due to their covid policy is weighing on the prices of oil.

Will market gain?

But, will it translate into gains for equity markets? Not necessarily

I’ve done a post on the same topic:

OMCs are major beneficiaries

  • With consecutive quarterly losses, Oil marketing companies like IOC, HPCL and BPCL have faced huge losses of late and this down move, if sustained may help improve some of the short term concerns of the sector.

Good news for Economy

  • Ultimately, this is good news for economy as fuel prices are one of the key determinants in inflation. Once inflation is stabilized, the focus can be turned to growth :slight_smile:
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Recession may not be in sight for our economy.
@GB26 You were right.

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Visible signs, governments’ policies, investors’ sentiments, general world’s situation, these are too big for retail like me.

So I follow the market, if it goes up, I try momentum, if it goes down, I buy for medium term to long term :face_in_clouds:

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Yesterday was a fun session in crude overnight.

Washington Post wrote an absurd article on how OPEC+ is open to increasing the production. Whereas throughout the year, they were just planning on cutting.

It caused a 6% fall to 82$ level in Brent, once Saudi denied this rumour…crude again bounced back to 87 levels

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Please keep printing just those fine articles. :innocent:

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Breached these lows on the back of massive surge in covid cases in china and increasing concerns on demand slowdown. Brent is now near 81.5$ and WTI is near 74$

At 11 months low - Next big trigger would be OPEC meeting on december 5th

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I think we’re getting to the point where the risk reward is getting favourable for a bullish position in Crude Oil. The points being -
1- Unrest has started in China and they can’t stay in lockdown for very long.
2- US SPR reserves need to be replenished.
3- The market has overestimated the inflation aspect and I’m in the camp that inflation is going to fall fast and demand destruction wouldn’t be as much as expected.

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1 and 2 are fully valid points

  1. True. But the elephant in the room is central bank. How they would approach inflation going forward.

Although they will be slight relief but i doubt if they would pivot early

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i still think there is couple more rate hike incoming

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Petroleum refining companies are having a field day! :slight_smile:

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Crude basket
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Source : Roshan kishore’s tweet

Indian crude oil basket as on 25th November is at $ 82.14 per barrel

Source : Petroleum planning and analysis cell’s website

Interesting to see that the effect of Russian oil imports on our overall crude oil bill is not as much as initially thought. Maybe the impact,at best might have been 5% discount to Brent oil’s price