Crude oil futures plunged over 1.3 per cent in the domestic market on Friday as investors and speculators exited positions in the energy commodity tracking weakness in the overseas market after Goldman Sachs cut its price forecast for the fuel next year amidst concerns that the market remains oversupplied and a slowdown in China’s economy that threatens to curb demand.
Goldman Sachs cut the price for the US crude benchmark, the WTI to USD 45 per barrel from USD 57 per barrel earlier, while the price for the Brent crude was slashed to USD 49.5 per barrel from USD 62 per barrel.
Investors cast aside a second straight decline in US oil rig count, which signaled lower production ahead. Baker Hughes reported that the number of rigs drilling for oil in the US fell by 10 to 652 last week.
However, a sharp tumble in US consumer confidence in September signaled a cooling recovery in the world’s biggest economy that may limit demand for the fuel. The gauge measuring US consumer sentiment tumbled to the lowest level in a year at 85.7 this month from 91.9 in August against the backdrop of turmoil in global financial markets.
Oil may extend losses today as tepid China factory and fixed asset investment data for August underscored concerns over the health of the world’s second biggest economy.
At the MCX, Crude oil futures, for the September 2015 contract, closed at Rs 3,000 per barrel, down by 1.35 per cent, after opening at Rs 3,041, against the previous close price of Rs 3,041. It touched an intraday low of Rs 2,945.
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