Mumbai: Crude oil prices witnessed a steep fall in futures trading on Monday, mirroring weakness in global oil markets as a stronger US dollar and negative investor sentiment dragged prices lower. On the Multi Commodity Exchange (MCX), crude oil for February delivery dropped by more than 5 percent, reflecting heavy selling pressure across commodities.
The February contract declined by Rs 309, or 5.17 percent, to settle at Rs 5,671 per barrel. Trading activity remained strong, with over 12,500 lots changing hands during the session. The March contract also fell sharply, losing Rs 294, or 4.94 percent, to trade at Rs 5,659 per barrel, with volumes of around 4,000 lots.
Global markets weigh on oil prices
The sharp fall in domestic prices came in line with losses in international crude markets. In global trade, West Texas Intermediate (WTI) crude for March delivery slipped by over 5 percent, falling USD 3.38 to USD 61.83 per barrel. Brent crude, the global benchmark, also declined sharply, losing USD 3.38, or nearly 5 percent, to trade at USD 65.94 per barrel.
Global oil prices were hit by a strong US dollar and rising bond yields, which made commodities less attractive for investors. A stronger dollar usually makes oil costlier for buyers using other currencies, leading to lower demand and weaker prices.
US developments trigger volatility
According to market experts, the sudden fall in oil prices was triggered by political and economic developments in the United States. Rahul Kalantri, Vice-President of Commodities at Mehta Equities, said crude prices turned highly volatile after Kevin Warsh was nominated by President Donald Trump as the next chief of the US Federal Reserve.
The nomination boosted the US dollar and government bond yields, which put pressure on oil prices. Rising interest rates generally reduce demand for risky assets like commodities, leading to selling across global markets. Weak investor sentiment and broader risk-off mood further added to the fall in crude prices.
Supply worries may limit downside
Despite the sharp decline, experts believe that oil prices may find some support at lower levels. Supply concerns linked to tensions between Washington and Tehran could limit further downside. In addition, severe winter weather in parts of the US may disrupt production and transport, offering temporary support to prices.
However, analysts expect crude oil to remain volatile in the near term, as global investors continue to react to currency movements, interest rate expectations and geopolitical developments. For now, the market remains cautious, with traders closely watching global cues before taking fresh positions.
