Brent crude oil price slips below $100, MCX crude tanks nearly 5% in sudden reversal

Crude Oil Prices Today: It turned into a volatile session for oil prices on Wednesday. What started as a strong rally in the morning didn’t last long, as crude gave up gains and slipped sharply later in the day. Brent Crude fell nearly 4.03 per cent from its intraday high of $105.86 per barrel to drop below the $100 mark, touching $99.96. At around 8 pm, Brent Crude price hovered at $101.36 per barrel. At the same time, West Texas Intermediate (WTI) also came off its highs. After climbing to $103.31 earlier in the session, it eased to around $98.78 per barrel.

MCX crude follows the global trend

The weakness wasn’t limited to international markets. Back home, crude futures on the Multi Commodity Exchange (MCX) also saw a sharp fall. Crude Oil April futures were trading at Rs 9,093, down Rs 474 or 4.95 per cent for the day. The drop reflects how closely domestic prices are tracking global cues right now.

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What changed during the day?

The shift in prices largely came after fresh signals on the geopolitical front. Donald Trump indicated that tensions between the US and Iran could ease over the next two to three weeks. There were also indications that Iran may be open to de-escalation, at least under certain conditions.

That was enough to cool some of the risk premium built into oil prices. Traders who had been betting on higher prices started booking profits, leading to a quick pullback.

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But risks still remain on the profound level

Even with this fall in the prices of crude, if you are expecting the situation is settled it is far from true. The Strait of Hormuz still manages to remain a key concern for the global world market. As a very significant chunk of the world’s oil supply passes through this route, and even a slightest of disruption there can push prices higher again very quickly.

And adding to the already confusing situation, the mixed economic signals from major economies like the US and China has made it clear why oil is moving so sharply in both directions without any support level.

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Oil prices still hovering near much elevated levels

Despite the fall which is argued to be a correction, the oil prices still remain relatively high and have mostly stayed above $100 per barrel through March. The larger picture shows that the broader trend continues to be supported by supply concerns and geopolitical uncertainty.

Markets take it positively

Interestingly, equity markets reacted positively to the easing tension signals. Sensex and Nifty moved higher in early trade, rising up to around 3 per cent, tracking global sentiment.