The crude oil futures turned red Thursday after extending gains on growing fuel demand and a bigger-than-expected draw in the US crude inventories.

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At 15:00, both oil benchmarks were marginally lower, with US oil trading at $72.19 and Brent crude at $76.18. Both contracts had jumped over 2.5 percent Wednesday.

Data showed US crude stocks fell 3.5 million barrels to 414 million barrels till September 17. This is the lowest total recorded since October 2018 and is a bigger drawdown than analysts expected.

JPMorgan's Luis Oganes in an interview with Manisha Gupta said the crude oil market remains well supported this year but he expects it to be around USD 60 per barrel range by end of 2022.

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"The projection we have for oil is the market remains very well supported in the remainder of this year and maybe in the first half of next year but we need to start watching a number of things like, what OPEC does," Luis Oganes of JPMorgan told CNBC-TV18.

The Organisation of Petroleum Exporting Countries (OPEC), at this stage, is sitting on nearly 3.8 million barrels per day of supply. "They could be providing this to the market but they are not because they are holding back on production, given what happened with COVID. However, as the demand recovery continues they certainly have an incentive to increase production into next year," Oganes said.

The same thing is happening with shale oil. There are also some moving parts that are very hard to predict and a lot of them are linked to geopolitics, he added.

"So our base case is oil will probably drop to $60 per barrel range towards the end of 2022, but it is predicated on the restoration of the supply," Oganes added.

Also Read: View: Crude oil rally has petered out, correction possible

Gold prices dipped after the US Federal Reserve indicated it could ease monthly bond purchases by next year and raise interest rates sooner than expected. Oganes believes with the beginning of the taper, there shouldn't be a significant rise in gold prices.

"A lot of the market dynamics for gold have been driven by global central bank's monetary policy cycle. We know the Fed is going to start tapering by the end of this year. At some point, there will be the initiation of tightening or interest rate increase, so at this stage, we are not seeing a big catalyst for gold to jump," Oganes said.

Spot gold in the US declined half a percent Thursday, trading at $1,771.10.

"Some people say we may see it back above $2,000 per ounce, but we don't see that in the near-term, if anything the risks are probably on the downside," he added.

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(Edited by : Yashi Gupta)

First Published:Sept 23, 2021 3:18 PM IST