Crude Oil futures Rallied Nearly 2 %n in the Domestic Market

Crude oil futures rallied nearly 2 per cent in the domestic market on Monday as investors and speculators booked fresh positions in the energy commodity tracking a bullish trend in the overseas market as bets of additional stimulus by China to prop up growth in the world’s second biggest economy, augured well for fuel demand.

The World Bank slashed its growth forecast for the Chinese economy to 6.9 per cent in 2015 from 7.1 per cent earlier, and to 6.7 per cent in 2016 from 7 per cent, which triggered speculation that policymakers will announce fresh measures to boost growth.

Meanwhile, a drop in US oil rig count to a five-year low signaled easing production ahead, stemming concerns over a worsening supply glut. The number of rigs drilling for oil in the US fell by 26 to the lowest level since August 2010 at 614 for the week ended September 25.

Traders shrugged off tepid US data which signaled a slowdown in the world’s biggest economy as services growth cooled in September while a labour market gauge came to a halt.

While the gauge measuring US services fell to 56.9 in September from 59 in August, but remained above the neutral-50 mark, that of labour market conditions came in at 0 from 1.2 in August, signaling stalled labour market activity. Meanwhile, US job growth slowed in September with payrolls advancing 142,000 following a downwardly revised 136,000 gain in August.

Investors also cast aside steep price cuts from Saudi Arabia, OPEC’s biggest oil producer & exporter which vowed to maintain production at high levels, joining the likes of Iran and Iraq which also made reduction in their official crude prices in September.

Oil may fall today as dismal US data signaled a slowdown in the world’s biggest fuel consuming nation, dimming demand outlook.

At the MCX, Crude oil futures, for the October 2015 contract, closed at Rs 3,030 per barrel, up by 1.99 per cent, after opening at Rs 2,998, against the previous close price of Rs 2,971. It touched an intraday high of Rs 3,067.

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