Oil price, after tripling from its bottom, may rise by 3-4 pct, expert says

Oil price has reached its immediate peak after a big rally as it has more than tripled from its bottom and the outlook for the commodity is that there is not likely to be an upside from here, Amit Sajeja, Assistant Vice President, Research, at Motilal Oswal told Zee Business.

The crude oil may see a maximum of 3-4 per cent uptick and not more, Sajeja said. The June Crude Oil futures was today trading at Rs 2409 per barrel at 1:10 pm after hitting an intraday high of Rs 2436 almost  down by over 4 per cent from the Wednesday close. The commodity ended at RS 2512 per barrel on Wednesday.

He said that much of the positivity has been factored in now, after the May cuts. As far as the international prices are concerned Sajeja said that he does not expect the WTI crude to go beyond USD 42. The US crude is trading around USD 32 with a recent high of USD 35. He said that the immediate barrier for the crude oil is around USD 35 which may not be breached convincingly. He expects a further correction the prices on the downside. The correction could likely be up to USD 7 or 17-18 per cent, he added bringing the levels to around USD 25.

He said that this is the view over the next two weeks period. For a one month view he said that the crude oil will be trading between USD 25 and USD 35.  

Another expert Anuj Gupta said that the good thing for oil is that the economies were opening, especially in India where the flights and trains have resumed operations. He expects the demand to get better in some time. Gupta is a Deputy Vice President, Commodity and Currency Research at Angel Broking.

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He also said that many rigs in the US have shut down operations after incurring huge losses amid the coronavirus lockdown and that could create a supply problem, helping the cause of crude oil to some extent.