The USD 20 correction in crude oil prices is a reasonable correction and should not come as a surprise, Zee Business Managing Editor Anil Singhvi said. He said that it was also not a big deal if the crude oil prices hit US 130 on supply disruptions.   

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The Managing Editor said that any cooling off in the geo-political tensions has had a bearing on the prices of the crude oil. 

 

He said that the spike in commodity prices were unjustified and were on sentiments. The fall and rise in prices of commodities is equally sharp, he added. He said that the correction augurs well for equity markets as commodities have a great impact on the inflation scenario.   

 

Oil prices fell by almost USD 20 on Wednesday after OPEC member the United Arab Emirates said it supported more oil being pumped into a market roiled by supply disruptions due to sanctions against Russia following its invasion of Ukraine. 

 

After the United Arab Emirates (UAE), a member of the Organization of the Petroleum Exporting Countries (OPEC), said that it was in favour of boosting production, crude oil prices have eased from multi-year highs. The United Arab Emirates and Saudi Arabia are likely to increase output because they both have spare capacity in the Organization of Petroleum Exporting Countries.

 

Along with the crude oil prices, gold prices dropped too. Zee Business' Managing Editor, Anil Singhvi, explains the reason behind this sudden drop.

Singhvi said that because the increased prices were due to sentiments and not lower supply, this was anticipated. 

With Ukraine getting assurance on security, it was obvious for the commodities prices to go down at the same speed of it moving upward, he added.

Market Guru also said that the US is not bothered much about the increased crude oil prices because they don't need to import it much.

Additionally, given that the chance of the world going to war is now negligible, Ukraine-Russia is settling their conflict independently. This will not impact the market any further, he added.

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Singhvi said that the current priority of the world is to fight inflation after being hit by a pandemic. 

 

"We favor production increases and will be encouraging OPEC to consider higher production levels," Ambassador Yousuf Al Otaiba said in a statement tweeted by the UAE Embassy in Washington.

 

According to a report by Reuters, the United States has called on oil producers worldwide to increase production if they can.

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