Sensex ends 546 points lower on rise in oil
24 Feb 2011
Indian equity benchmarks shattered on the back of a sharp spike in crude oil prices in international markets on Thursday, reacting to growing concerns in Libya, which could spread over to other oil-producing as well as exporting countries in the Middle East.
The Sensex shed more than 600 points in intraday trade while the Nifty slipped below the 5,300-mark-near to its two-week lows.
Brent crude rallied as much as USD 8.54 a barrel to a peak of USD 119.79 a barrel, trimming gains to trade up USD 6 at USD 117.25 a barrel. The contract has risen nearly 14% in four days.
US crude for April delivery rose as much as USD 103.41, the highest since September 2009. It traded up USD 4.31 at USD 102.41 a barrel.
The concern for oil markets is how Libya unrest might affect Saudi Arabia, which not only pumps around 10% of the world's oil but is also the only holder of significant spare crude production capacity that could be used to plug supply outages such as those being suffered by Libya.
"The situation in the Middle East is causing a lot of uncertainty in the market now. The risk of disruption to major producers in the region is what every investor is watching out for," said Ken Hasegawa, a commodity derivatives manager at Newedge brokerage in Tokyo.
