Shamik Bhose, Independent Commodities Advisor won’t be surprised if the Crude touches USD 68 per barrel or thereabouts. “Looking at the charts, I would look at earlier supports as new resistance. If this continues, I would look at USD 68 per barrel. Otherwise, it could decline to USD 55 per barrel.”
Here is a verbatim transcript of the exclusive interview with Shamik Bhose on CNBC-TV18. Also watch the accompanying video.
Q: Crude has seen good gains. Do you expect it to run-up even more?
A: Yes. It is definitely possible. If we look at the fundamentals, there is nothing in favour of this run-up because there is enough stocks upsurge as you go into the driving season, which is still one and a half months away. But I guess there is a slight uneasiness regarding geopolitical situation, currencies with the dollar declining, which leads to commodities getting repriced upwards.
Last but not the least, the overall feeling in the markets is that with America putting in such an amount of financial stimulus and the monetising of this debt will eventually lead to inflation in the dollar zone and dollar’s debasement. Thus commodity prices will get repriced upwards in dollar terms. You are seeing that in gold and also in crude.
Q: Are you looking at levels like USD 65-70 per barrel from hereon or do you think we are pretty much done with the current rally?
A: I think looking at the decline from USD 147 per barrel to USD 34 per barrel, I would say a 38% retracement should take you to around about USD 70 per barrel or thereabouts.
I won’t be surprised if we see it high upwards of USD 68 per barrel or thereabouts. But when the market was declining, this area of USD 61-62 per barrel was a major support zone. That is why it is acting as resistance. The next spot could be between USD 68 and USD 70 per barrel.
Looking at the charts, I would look at earlier supports as new resistance. If this continues, I would look at USD 68 per barrel. Otherwise, it could decline to USD 55 per barrel.
Q: Would you be a buyer at these levels or would you want to wait for some dips?
A: I would say I was a buyer after USD 52 per barrel. At this level, I am a profit taker. Yes, I would buy here on dips. But at the same time, I would be a little diffident about shading this rally. If I am not long already, I would probably be a little hesitant to jump in over here.
Q: A weak dollar has supported gold. Do you think a run-up can be expected in the coming week as well?
A: Yes. It has bounced off the 200-day moving average. That is a solid support around about USD 860 per ounce to USD 870 per ounce. Then you see support coming in around USD 890 per ounce. Then the market after a couple of days of hanging around USD 916-920 per ounce has moved up again. That is why if it closes above USD 940-950 per ounce, I think it could attempt USD 970-980 per ounce. As such it doesn’t look to have the legs to go beyond that. But these are times when gold surprises. And considering the dollar’s debasement and worldwide inflation and problems that you expect further from Eastern Europe, from Western Europe, credit card problems, they are as such not going away. That could mean that gold could continue to attract ETF buying interest.
