Oil prices likely to remain range-bound through 2019; Brent to average at $60-80, WTI at $50-70/bbl: Scotiabank

Oil prices are expected to remain range-bound for the rest of the year, with Brent to average at $60-80 and WTI at $50-70 per barrel. It could alleviate market fears over higher oil prices deteriorating the nation’s trade balance and current account balance, according to the latest research report from Scotiabank.

The slowing global economy will likely dent oil demand, although OPEC and allies including Russia have agreed to extend crude oil production cuts that are running at around 1.2 million barrels a day for nine months into Q1 2020.

India’s new finance minister Nirmala Sitharaman will present the first full-year Union Budget for FY2019-20 on July 5, which is likely to prop up local bonds and the INR as the government is likely to stick to the fiscal deficit target of 3.4 percent of GDP stated in the interim budget unveiled on February 1.

In addition, it will enhance foreign investors’ confidence if the full-year budget can boost investment and consumption demand to revive growth and bring the economy back on track, while providing support to the banks and NBFCs, the report added.

"We remain bullish on the INR, maintaining our short USD/INR position. Technically, the pair will fluctuate gradually lower within the pennant. Meanwhile, the RBI replenishing its foreign currency stockpile will continue slowing the pace of appreciation in the high-yielding currency," Scotiabank further commented.