Crude oil futures, which fell by more than 4 per cent on Tuesday, traded lower on Wednesday following a weak demand outlook and rise in the number of Covid cases in China.

At 10 am on Wednesday, March Brent oil futures were down by 0.22 per cent at $81.92 and February crude oil futures on WTI dipped by 0.35 per cent to $76.66.

January crude oil futures were trading at ₹6,372, down by 1.59 per cent, on Multi Commodity Exchange (MCX) during the initial trading hours against the previous close of ₹6,475, and February futures were trading at ₹6,421 against the previous close of ₹6,517, down 1.47 per cent.

‘Most likely outcome’

The “Year End Q&A” with Alan Greenspan, former Chairman of the US Federal Reserve, posted on the Website of Advisors Capital Management, said a recession is the likely outcome of the US economy. A recession in the economy will impact the demand for commodities such as crude oil in the market.

To a question, if a recession is required to bring down inflation in the US, Greenspan said: “A recession does appear to be the most likely outcome at this time. While the last two monthly inflation reports did show a deceleration in the rate of price increases, it does not change the fact that prices are still increasing. Indeed, official inflation numbers could remain tame in the near term owing solely to the methodology by which they are measured, most notably housing costs. However, I don’t think it will warrant a Fed reversal that is substantial enough to avoid at least a mild recession.

“Wage increases, and by extension employment, still need to soften further for a pullback in inflation to be anything more than transitory. So, we may have a brief period of calm on the inflation front but I think it will be too little too late.”

Now Greenspan is the senior economic advisor at Advisors Capital Management.

This statement comes close on the heels of a comment on the economic slowdown by the Managing Director of International Monetary Fund (IMF), Kristalina Georgieva.

In a programme of the CBS News recently, the IMF MD had said: “The new year is going to be tougher than the year we leave behind”. She had stated that big economies such as the US, Europe and China are all slowing down simultaneously.

The near-term demand outlook for crude oil was also impacted by the increase in the number of Covid cases in China and the deaths associated with that. Market reports noted that the current reopening of the economy in China, which was impacted by zero-Covid policy-related control measures earlier, will be a key factor in helping the economy in the long term in that country.

Mentha oil, cottonseed oil cake gain

January mentha oil futures were trading at ₹1,042.30 early on Wednesday against the previous close of ₹1,033.50, up by 0.85 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), January cottonseed oilcake contracts were trading at ₹3,074 against the previous close of ₹3053, up by 0.69 per cent.

January steel long futures were trading at ₹48.450 against the previous close of ₹48,940, down by 1 per cent.

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