Circuit limits confine the underlying to move in that particular range for that day, it means upper circuit limit acts as cap and lower circuit limit acts as floor.
These limits are introduced by exchanges so as to keep a check on panic buying or selling, rogue trading, fat-finger errors etc.
Ideally once these limits are hit the trading will be halted for that particular day for that particular underlying.For few scripts there will be multiple circuit limits which means once the first limit is hit then trading will be halted for few minutes( called as cooling period) and second level of limits are introduced and so on.
In case of crude first limit is 4% of previous days closing price and those limits will be shown as upper limit and lower limit.Once they are breached the limits are relaxed to 6% with out any cooling period and new limit prices are displayed.
If 6% is breached limits will be raised to 9% with 15 minutes of cooling period.
In case price movement in international markets is more than the maximum daily price limit (currently 9% for crude), the same may be further relaxed in steps of 3% with the approval of FMC(Now merged with SEBI).
Thanks A lot