Brent may test $78-80 levels, support at $68-70 levels: Emkay

Mumbai (Maharashtra) [India], June 16 (ANI): Brent crude oil prices may test higher levels of USD 78 to 80 and the support may be at USD 68 to 70 level, Emkay Wealth Management said on Wednesday.

But the rise may be to a certain extent limited by the strength in US dollar against other currency majors.
Emkay said one major factor that dominated oil markets is the possibility of a nuclear deal between the United States and Iran, and also better relations between the two countries based on their reported talks.
This will mean that supply from Iran will be in the markets as soon as such a pact is reached. Therefore, the prices should naturally come down. But there is a strong view that oil prices may start going up, anticipating this supply in the near future.
One of the seasonal factors is that during and immediately after the summer in northern hemisphere, the number of people who would take to highways and move to holiday destinations is quite large, and this keeps the prices high.
This is one reason that may support prices to remain high, said Emkay. It is also worth noting that recovery in economic activity in the United States and Europe is on course. The same may be true of the leading Asian countries too.
This may also support higher oil prices, though demand in Asia is yet to go back to the pre-pandemic levels. The production in the United States which was at 13 million barrels per day just before the pandemic has touched almost 11 million barrels per day recently.
Therefore, restoration of supply as well as demand is happening.
Overall economic conditions warrant higher consumption and thus higher prices. Again, said Emkay, much will depend on the stance taken by OPEC+ which may be meeting soon.
Russia is now in sync with OPEC in achieving the production cuts which the OPEC had envisioned earlier.
A related matter is enhanced climate activism seen in the recent past and the likely attempts at containment of carbon emissions by oil companies and producers.
It is gathering pace and it is good for environment and the posterity. Emkay said it also means higher prices for oil with implemention of governance standards on climate.
The extent to which renewable energy or electricity can replace traditional sources is limited in the initial stages. In fact, many believe that common man may not be able to afford the costs associated with electric vehicles. (ANI)