World equity markets are doing well and you had a rally that continues into the new year! But on the commodity side, oil is heating up, raising a question mark on whether or not inflation would finally rear its head for global economies at large. Would the global low inflation environment change in a meaningful manner and how will it directly impact India? Is over $70 the new reality on crude?
At the moment, it seems to be a reality. The oil market has heated up because of supply shocks over the last couple of weeks. The Forties pipeline system which has just resumed production after two weeks, the Libyan pipeline blast earlier in the week and of course the unrest in Iran. All this plus very cold weather. So, we have seen supply shocks as well as demand shocks. I think $70 is a reality but it should not stay there for much longer. Read More…
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