Global crude prices have been easing from last week. Front month NYMEX WTI rose to $47.77, while Brent futures dropped by five cents or 0.10% to $48.92 a barrel, after rising as high as $49.47 earlier, the most since early November.

Despite some significant supply disruptions, most notably in Canada, ongoing bearish fundamentals precipitated a modest retracement in prices.

Before the stock market crash in China, India was threatening to overtake it as the global leader in energy demand.

Last year, India ranked 3rd in terms of global oil demand but its GDP growth rate has finally surpassed China’s, putting it on track to become number one for oil demand.

India imports around 80% of the oil that it uses, mostly from OPEC, and the low commodity prices are only helping to bolster its economic growth.

Adding to the growth in India is China’s refusal to backslide towards a fossil fuel-based economy after initiatives to make electric vehicles and clean energy a priority. Although the U.S. and China remain the world’s top two consumers of energy, India has a clear path to take over through cheap oil and gas.

The demand for fuel and energy has contributed to a boost in Indian imports of African oil to the highest level in five years. In 2015, the country imported a fifth of its oil from African sources as opposed to just over 16% the year before, while Middle Eastern sources remained the same. Gasoline consumption rose by nearly 15% in 2015 as well.

Daily oil consumption is expected to rise from 6 million barrels per day to 10 million by 2040, according to the International Energy Agency (IEA). For comparison, China currently consumes around 10.5 million barrels per day – 75% more than India. However, China’s economy is decelerating while India’s is still heating up.

Crude’s Hedging Perspectives:

We continue to recommend initiating longs in near month futures position which can enable you to lock in the price of this WTI crude above current levels of $47.77 a barrel for targets of $49 levels.

There is no maximum profit for the long futures position. The futures trader stands to profit as long as the underlying futures price goes up.

The long hedge involves taking up a long futures position. Should the underlying commodity price rise, the gain in the value of the long futures position will be able to offset the increase in purchasing costs.