MC: Crude to touch $42/bbl if it breaks $45/bbl: Sushil Global
Ashish Shah of Sushil Global Commodities said crude oil continued its downward journey in spite of an unexpected decline in US crude inventories mainly on the existing concerns of demand destruction. He said if crude breaks USD 44.80 per barrel, one might see USD 43–42 per barrel in the near term. However, he doesn’t see it sustaining those levels.
Here is a verbatim transcript of the exclusive interview with Ashish Shah on CNBC-TV18. Also watch the accompanying video.
Q: Let us start with crude prices. We have seen a low of USD 45.30 per barrel. Where does it go from here?
A: In spite of an unexpected decline in US crude inventories yesterday, crude oil continued its downwards journey mainly on existing concerns of demand destruction. Now, to add to this, we even had bearish statements by the OPEC President saying that crude oil could even fall to very low levels. This keeps the entire commodity under pressure. But technically and psychologically, many funds viewed USD 45 per barrel area as a very strong support area. If it breaks USD 44.80 per barrel, we might see USD 43–42 per barrel in the near term. However, I don’t see it sustaining those levels. We should see some value buying and maybe short covering in those areas happening.
Q: Gold also has seen strong support at USD 762 per ounce. We haven’t seen that level breach. Do you think some value buying or some bargain buying might support these levels as well?
A: This week will remain very crucial for gold and the weekly close tomorrow will determine what's going to happen in the coming week ahead. The US dollar index continues to remain strong because it is on the view that central banks across the world would cut interest rates more than the Fed, which is keeping the metal under pressure. Technically, I feel that if it closes below USD 777 per ounce, we will be seeing [a range of] USD 763 per ounce and USD 755 per ounce. So, probably by tomorrow or maybe Monday or Tuesday, it needs to give us a sustained close above the USD 777 per ounce to test the USD 790 per ounce range, which is again a very strong resistance zone.
