Energy contracts dip on MCX

Energy Futures including crude oil and natural gas on Multi Commodity Exhange (MCX) continued their downward rally on Monday.

The near month contract for crude price fell by Rs 38 per barrel to Rs 2,764 where as natural gas weakened by Rs 13 per mmBtu closing at Rs 362.

November crude oil contract closed at Rs 2,825 a barrel, up Rs 41 from its previous close. Similarly, December contract slipped by Rs 56 a barrel at Rs 2,870 on Monday. On natural gas front, the November and December contracts saw a slump of Rs 10 and Rs 9 per mmBtu respectively.

Though analysts say that speculation among traders is playing an important role in softening of prices, high level inventories in the US is the main factor bringing down prices.

"Falling prices of crude can be attributed to the rising inventories in US. At the same time, the decline is also getting support from the fact that confrontation over Iran has not escalated to the level it was earlier expected," said Nagarajan Narasimhan, head-research, Crisil Research.

He added that the storms in America (which affects the oil production) are also expected to be less damaging this year compared with last year's storms which is further introducing the bearish impact in the crude prices.

Last week had seen a fall of Rs 210, Rs 206 and Rs 170 per barrel of crude oil for October, November and December contracts respectively. October contract for crude at closed at Rs 2,802 a barrel last week. October contract for natural gas on MCX had closed at Rs 275, a decline of Rs 9 per mmBtu last week.