Crude oil prices rose by 1.96 per cent on Monday at the domestic markets as a result of supply concerns on fears that Israel and Iran may be closer to a war over Tehran's nuclear ambitions which in turn could disrupt supply in the region. At the MCX, crude oil futures for December 2012 contract were trading at Rs. 4,864 per barrel, up by 1.96 per cent, after opening at Rs. 4,849.70 against the previous closing price of Rs. 4,847.40. It touched the intra-day high of Rs. 4,872.80 till the trading. (At 11.11 AM today).
Sentiment improved further as weaker dollar makes crude oil cheaper for those holding other currencies, thus increasing demand. The U.S. dollar index, a measure of the value of the United States dollar relative to a basket of foreign currencies, was trading 0.22 per cent lower at 81.075 on the Inter-Continental Exchange (ICE) at 11.12 AM IST.
Prices also rose on hopes that the U.S. will avoid a fiscal cliff after Democratic and Republican congressional leaders met with President Barack Obama earlier to discuss ways to avoid the cliff, and both sides emerged exuding optimism for a deal which further improved the demand prospects for the fuel.
However, gains in the fuel were curbed after the Federal Reserve said that industrial production fell unexpectedly to -0.4 per cent, from 0.2 per cent in the preceding month whose figure was revised down from 0.4 per cent indicating weak manufacturing activity in US, world's largest consumer of crude oil which reduced the demand prospects for the fuel.