At Multi Commodity Exchange, crude palm oil for delivery in current month rose by Rs 1.40 or 0.26 per cent to Rs 523.80 per 10 kg in a business turnover of 32 lots.
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Oil prices on Friday remained around April lows as slowing economic growth threatened to worsen ongoing oversupply of crude and refined products. Brent crude dropped from around US$44.90 a barrel to US$43.5 levels.
“Investors have become overly bearish on oil as USA production and gasoline inventories continue to rise”.
The Energy Information Administration (EIA) said in its weekly report on Wednesday that U.S. oil inventories rose 1.7 million barrels last week to 521.1 million barrels, ending a 7-week streak of declines and beating market consensus of a 2.3-million barrels decrease. The build adds to an already huge global refined product glut just as slowing economic growth dents the demand outlook for crude.
Oil markets have been dogged by oversupply for the last two years and fell by as much as 70 percent between 2014 and early 2016, when Brent hit the lowest in more than a decade at around $27 per barrel.
Hedge funds have been liquidating bullish positions in crude futures and options, putting downward pressure on oil prices in recent weeks.
Now the liquidation of old long positions, which profit from rising prices, is being replaced by the establishment of short positions, which make money out of lower prices, as fund managers try to capitalise on the downward cycle in prices.
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“The trend is still down and the bears seem to be in control”, Varga said, adding: “But we could see an upside correction before driving lower again”.
