Crude oil futures traded lower on Tuesday morning following a strong US dollar and surging US bond yields.
At 9.52 a.m. on Tuesday, December Brent oil futures were at $89.84, down by 0.96 per cent, and November crude oil futures on WTI (West Texas Intermediate) were at $88.17, down by 0.73 per cent.
October crude oil futures were trading at ₹7353 on Multi Commodity Exchange (MCX) during initial trading against the previous close of ₹7542, down by 2.51 per cent; and November futures were trading at ₹7239 as against the previous close of ₹7413, down by 2.35 per cent.
Below-50 PM for 11th month
On Monday, the US dollar increased to a 10-month high against a set of other peers. This was after the US government avoiding a partial shutdown. Added to this, the 10-year US yield reached to its highest levels since 2007.
The ISM (Institute of Supply Management) Manufacturing PMI for the US highlighted a contraction in the manufacturing sector. According to ISM data, manufacturing PMI increased to 49 in September, which is the highest reading since November 2022. The reading was 47.6 in August. However, the September data showed the 11th straight month of a below-50 PMI. This signalled a contraction in manufacturing.
These developments led to an apprehension in the market that the US Federal Reserve could keep interest rates higher for a longer period. Such a move could slowdown the economic growth in that country.
A stronger dollar and an increase in interest rate make the commodities such as crude oil costlier for those holding other currencies. This could impact the demand for crude oil.
Market took note of a statement by the energy minister of Turkey that it will restart the operation of a key oil pipeline from Iraq that has been suspended for six months. This restoration would help provide additional supplies of crude oil to the market, impacting the price of the commodity.
Guarseed, guar gum drop
October natural gas futures were trading at ₹238 on MCX in the initial trading hour of Tuesday morning against the previous close of ₹245.90, down by 3.21 per cent.
On NCDEX, guarseed November contracts dipped by 1.38 per cent to ₹5,594 a quintal, while guar gum November futures declined by 1.47 per cent to ₹11,260 a quintal.