Crude oil futures traded lower on Thursday morning on hopes of a potential release of around 180 million barrels of crude oil from strategic petroleum reserves (SPR) in the US over the next few months.

At the time of filing this report, May Brent oil futures were at $108.30, down by 1.75 per cent, and May crude oil futures on WTI at $101.98, down by 5.42 per cent.

April crude oil futures were trading at ₹7,722 on Multi Commodity Exchange (MCX) during initial trading hours against the previous close of ₹8,115, down by 4.84 per cent, and May futures were trading at ₹7,625 against the previous close of ₹7,984, down by 4.5 per cent.

Quoting sources, reports said the US would release 180 million barrels of crude oil from its SPR over a period of several months to bring down the prices of crude oil in the market. The reports also said US President Joe Biden would give details about the release plan later on Thursday.

US inventories slip

The Petroleum Status Report for the week ending March 25, which was released by the US Energy Information Administration (EIA) on March 30, showed a decline in the crude oil held in SPR. US had a stock of 568.3 million barrels of crude oil in the SPR for the week ending March 25 as against 571.3 million barrels for the week ending March 18. The stock in the SPR was at 637.8 million barrels as on March 26 2021.

The US EIA report also said the US commercial crude oil inventories (excluding those in the SPR) decreased by 3.4 million barrels from the previous week. At 409.9 million barrels, US crude oil inventories are about 14 per cent below the five-year average for this time of year, it said.

The likely move by the US to release crude oil from SPR comes at a time when the Organization of the Petroleum Exporting Countries (OPEC) and its allies such as Russia are scheduled to meet on Thursday. Market is of the view that OPEC+ countries are unlikely to increase crude oil output above the agreed level of 400,000 barrels a day in their meeting.

In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said crude oil prices soared about 4 per cent on Wednesday on supply tightness and the growing prospect of new Western sanctions against Russia.

“We expect crude oil prices to remain volatile to negative in today’s session ahead of OPEC+ meeting outcome. Crude oil is having support at $98.40-$95.80 and resistance is at $105.20–107.50, In rupee terms crude oil has support at ₹7,640-7,460; while resistance is at ₹7,950–8,140,” he said.

April natural gas futures were trading at ₹418.50 on MCX in the initial hour of Thursday morning against the previous close of ₹423.70, down by 1.23 per cent.

Dhaniya gains

On the National Commodities and Derivatives Exchange (NCDEX), April dhaniya contracts were trading at ₹10,800 in the initial hour of Thursday morning against the previous close of ₹10,742, up by 0.54 per cent.

April steel long futures were trading at ₹57,400 on NCDEX in the initial hour of Thursday morning against the previous close of ₹58060, down by 1.14 per cent.

Related Topics
comment COMMENT NOW