Oil prices expected to go up soon
Posted on: 06/Jul/2013 11:00:08 AM
A barrel of oil could cost as much Rs. 7000 in the coming months, say experts. It is currently at Rs. 6000. The rise is expected in the anticipation of the hurricane season in the United States, followed by a winter that is expected to be as bad as the last year. These seasons give rise to a demand in oil, and therefore, a rise in the prices. The weakening of the rupee against the dollar is also a reason for the rise.
‘The oil refining and marketing companies could cut their costs and losses and the consumer could be spared these high prices if the Indian refiners who import oil hedge their positions by buying in the forward market to save them from increased prices. For instance India buys per day 3 million barrels (6-7 per cent of the world’s demand) and will continue to do so. Therefore it can purchase the supply for the next six months now in the forward market so that when they take delivery they do not lose money.They should also hedge the currency. Both these are not done seriously’, says Dharmesh Bhatia, Deputy Vice President (Research) at Kotak Commodities Services Ltd.
