A strong dollar and reports of an increase in US crude oil inventories led crude oil futures to trade lower on Wednesday morning.
At 10.01 am on Wednesday, November Brent oil futures were at $84.98, down by 1.50 per cent, and November crude oil futures on WTI were at $77.44, down by 1.35 per cent.
October crude oil futures were trading at ₹6,379 on Multi Commodity Exchange (MCX) in the initial trading hour of Wednesday morning against the previous close of ₹6,473, down by 1.45 per cent; and November futures were trading at ₹6,360 against the previous close of ₹6,458, down by 1.52 per cent.
No currency pact, says US
The dollar is trading near a 20-year high. A stronger dollar makes commodity costlier for people trading in other currencies, impacting the demand for crude oil. Citing an official from the White House, media reports also ruled out the possibility of a currency agreement among major economies to weaken the dollar.
Meanwhile, reports quoting industry body American Petroleum Institute said there was an increase in crude oil inventories in the US. The official data is expected later in the day.
Oil production in the US was also impacted by Hurricane Ian, which entered the US Gulf of Mexico on Tuesday. According to forecasts, this is likely to become a dangerous Category 4 storm over the warm waters of the Gulf.
A Reuters report said Ian is the first hurricane this year to disrupt oil and gas production in the US Gulf of Mexico. Around 15 per cent of US crude oil and 5 per cent of dry natural gas are produced here.
The decline in the prices of crude oil has now led to market speculation that the Organization of Petroleum Exporting Countries and allies, known as OPEC+, may reduce output after a meeting early next month. According to reports, Russia, which is a part of OPEC+, is lobbying for a production cut of 1 million barrels a day.
In his outlook for the day, Prathamesh Mallya, AVP (Research, Non-Agri Commodities, and Currencies), Angel One Ltd, said: “We expect crude to trade lower towards ₹6,360, a break of which could prompt the price to move lower towards ₹6,220.”
Dhaniya tops ₹11,000
October natural gas futures were trading at ₹564.40 on MCX in the initial trading hour of Wednesday morning against the previous close of ₹563, up by 0.25 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), October dhaniya contracts were trading at ₹11,060 in the initial trading hour of Wednesday morning against the previous close of ₹10,916, up by 1.32 per cent.
October steel long was trading at ₹49,400 on NCDEX in the initial trading hour of Wednesday morning against the previous close of ₹49,640, down by 0.48 per cent.