Reports that The People's Bank of China had cut the reserve required ratio, also saw renewed demand for crude. Analysts believe that crude would continue to trade firm amidst the escalating tensions with Iran and the easy liquidity conditions prevailing in the markets.
In fact, a gush of liquidity, especially from the European Central Bank has seen commodities, including crude rallying over the last six weeks.
Rising crude is not good news for India, since it has an effect on inflation and fiscal deficit. While diesel, which is not yet decontrolled, pushes up the fiscal deficit, petrol which is now linked to market rates, causes a spike in inflation.