Crude oil futures traded higher on Thursday morning as the developments in the global market indicated a tightening of supplies in spite of the economic slowdown in some countries.
At 10.01 am on Thursday, October Brent oil futures were at $101.85, up by 0.62 per cent; and September crude oil futures on WTI were at $95.36, up by 0.50 per cent.
September crude oil futures were trading at ₹7,614 on Multi Commodity Exchange (MCX) in the initial trading hour of Thursday morning against the previous close of ₹7,536, up by 1.04 per cent; and October futures were trading at ₹7,592 as against the previous close of ₹7,512, up by 1.06 per cent.
Saudi Arabia’s statement earlier this week on the probable production output cut by OPEC (Organization of the Petroleum Exporting Countries) and its allies, known as OPEC+, helped boost price of the commodity during the week.
Market reports now indicate that such production cuts may coincide with a return of Iranian oil to the market. This follows Wednesday’s response by the US to Iran and the European Union over reviving the 2015 nuclear deal. Any revival of the deal will help supply crude oil from Iran to the global market. Iran is now facing sanctions from US and other western nations, and the revival of the deal will help lift the sanctions on it.
Added to this, the decline in the crude oil inventories in the US for the week ending August 19 also helped boost the price of the commodity.
The petroleum status report of the US EIA (Energy Information Administration) for the week ending August 19, which was released on August 24, showed that the US commercial crude oil inventories (excluding those in the strategic petroleum reserve) decreased by 3.3 million barrels from the previous week. At 421.7 million barrels, US crude oil inventories were about 6 per cent below the five-year average for this time of year. Market analysts pointed out that the decline in the crude oil inventories was due to the increase in the US crude export to other countries.
However, there was lack of demand for petroleum products in the US market. Total products supplied over the last four-week period averaged 20 million barrels a day, down by 4.7 per cent from the same period last year.
Over the past four weeks, motor gasoline product supplied in the US averaged 8.9 million barrels a day, down by 7 per cent from the same period last year. Distillate fuel product supplied averaged 3.9 million barrels a day over the past four weeks, down by 2.3 per cent from the same period last year.
Dhaniya turns cool
September natural gas futures were trading at ₹736 on MCX in the initial trading hour of Thursday morning against the previous close of ₹742, down by 0.81 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), September steel long futures were trading at ₹50,270 in the initial trading hour of Thursday morning against the previous close of ₹50,820, down by 1.08 per cent.
September dhaniya contracts were trading at ₹11,222 on NCDEX in the initial trading hour of Thursday morning against the previous close of ₹11,286, down by 0.57 per cent.