Crude Oil futures Tanked Nearly 7 % in the Domestic Market

Crude oil futures tanked nearly 7 per cent in the domestic market, plunging to the lowest level in twelve years in the overseas market on Monday as investors and speculators exited positions in the energy commodity as a worsening economic slowdown in China, the world’s second biggest oil consuming nation, threatened to curb demand for the fuel.

Producer prices in China fell for a record 46th month on the trot in December 2015, down 5.9 per cent, year on year while consumer inflation remained at about half of the government’s 2015 target, signaling fears of a hard landing in the world’s second biggest economy.
 

Weak demand from China may intensify a global supply glut at a time when Iran is getting ready to unleash millions of barrels of its oil with implementation of the Islamic country’s nuclear deal with the West just days away, which will result in a lift-off of West-imposed sanctions, helping Iran to bolster oil exports.
 

Traders cast aside data showing an improvement in US labour market conditions which may help buoy demand for the fuel in the world’s biggest fuel consuming country. The US Labour Market Conditions Index climbed to 2.9 in December from 2.7 in November.
 

Oil may witness a rebound today as the freefall in the energy commodity in recent sessions may offer a good bargain buying opportunity in the fuel, at existing levels.
 

At the MCX , Crude oil futures, for the January 2016 contract, closed at Rs 2,089 per barrel, down by 6.9 per cent, after opening at 2,215, against the previous close price of Rs 2,244. It touched an intraday low of Rs 2,047.