A $10 intra-day plunge in crude prices on Tuesday brought cheer to markets across Europe and the US, as also India, raising hopes that authorities could go soft on interest rates with inflation easing.
The 30-share Sensex of the Bombay Stock Exchange surged 551 points, 3.8 per cent, to 15,089 as crude prices tumbled to a low of $105.46 per barrel in Tuesday’s trading. The sharp fall came on news that a hurricane, which hit the southern coast of the US, had spared oil rigs and production facilities in the Gulf of Mexico.
Crude prices have fallen more than 40 per cent since touching an all-time high of $147 per barrel two months ago — a spike that took inflation at home close to a worrisome 13 per cent and forced the RBI to get harder with interest rates. “If oil stabilises around $100 per barrel the overall inflation will come down drastically,” said Manish Bandi of India Infoline.
Easing crude prices mean less strain on finances of the government and oil firms. It may not immediately lead to cuts in retail prices of petrol, diesel and cooking gas, as Petroleum Minister Murli Deora indicated.