Prices of Brent crude oil expected to be steady in near term: Emkay

New Delhi [India], December 22 (ANI): Global crude oil prices, which are currently hovering around USD 80 per barrel (Brent), are expected to stay in a range-bound pattern in the near term with the possibility of some decline, said wealth management and advisory firm Emkay.
Over the past month, global crude oil prices have been trading in a narrow range.
Emkay Wealth Management, the wealth management and advisory arm of Emkay Global Financial Services, has released a note on Brent crude, the price outlook, and the reason for the rally in crude oil prices.
In its previous update, Emkay highlighted two conflicting factors influencing the trajectory of oil prices. One perspective revolved around the concept of demand destruction, while the other emphasised the anticipated demand growth from countries such as India and China over the long term.
"Upon closer examination, it appears that the immediate and short-term dynamics may be influenced by demand destruction, whereas the sustained, long-term growth in demand is expected to stem from the economic engines of India and China," Emkay said in a note.
It added that the argument for demand destruction primarily stems from the widespread occurrence of high inflation across countries, with fuel prices being a major driver of this inflationary trend.
"The premise is that elevated prices act as a self-correcting mechanism. In support of this perspective, observations have been made regarding a substantial decline in fuel consumption in the US during the recent holiday season. This notable reduction is believed to be a consequence of consumers exercising restraint in response to the elevated prices," it added.
Citing an International Energy Agency (IEA) report, it said data indicated a significant drop in US gasoline consumption to levels not witnessed in two decades.
If fuel prices decline from their current levels, the potential positive effect on global inflation becomes advantageous for import-dependent economies such as India, China, and many parts of Europe.
"This development could pave the way for a more accommodative or soft monetary policy in the upcoming quarters," Emkay added. (ANI)