Crude oil futures traded lower on Tuesday morning following concerns over the resurgence of Covid cases in China and a strong US dollar.
At 10.01 am on Tuesday, December Brent oil futures were at $95.88, down by 0.32 per cent, and November crude oil futures on WTI were at $90.71, down by 0.46 per cent.
October crude oil futures were trading at ₹7,475 on Multi Commodity Exchange (MCX) in the initial trading hours against the previous close of ₹7,597, down by 1.61 per cent, and November futures were trading at ₹7,395 as against the previous close of ₹7,502, down by 1.43 per cent.
Controlling Covid spread
In light of recent Covid-19 cases, there is concern that China may resort to more lockdowns in order to control the virus’ spread. Any such move would impact the demand for the commodity in the global market.
The dollar went up as the market expected data to show high inflation this week. The US Federal Reserve has increased interest rates in the past few months to control inflation. The market expectations of high inflation data have led to apprehensions about another round of interest rate hikes. Any more hikes will make the dollar costlier for those holding other currencies. This is likely to impact the demand for crude oil.
However, oil prices were supported by the decision of OPEC (Organization of Petroleum Exporting Countries) and its allies, known as OPEC+, to cut production output by 2 million barrels a day.
In his daily market outlook, Prathamesh Mallya, AVP (Research, Non-Agri Commodities, and Currencies) of Angel One Ltd, said, “We expect crude to trade lower towards ₹7430 levels, break of which could prompt the price to move lower to ₹7,270 levels.”
Cotton blooms, castorseed wilts
October cotton futures were trading at ₹34,870 on MCX in the initial trading hour of Tuesday morning against the previous close of ₹34,660, up by 0.61 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), October dhaniya contracts were trading at ₹11,850 in the initial trading hour of Tuesday morning against the previous close of ₹11,676, up by 1.49 per cent.
October castorseed futures were trading at ₹7,122 on NCDEX in the initial trading hour of Tuesday morning against the previous close of ₹7,170, down by 0.67 per cent.