Crude oil drops as China’s imports in July decline

Crude oil futures traded marginally lower on Tuesday morning as China reported a decline in imports during July raising concerns over the demand for the commodity in the major consuming market.

At 10.03 am on Tuesday, October Brent oil futures were at $85.42, down by 0.09 per cent, and September crude oil futures on WTI (West Texas Intermediate) were at $82.07, up by 0.16 per cent.

August crude oil futures were trading at ₹6,787 on Multi Commodity Exchange (MCX) during initial against the previous close of ₹6,806, down by 0.28 per cent, and September futures were trading at ₹6,758 as against the previous close of ₹6,772, down by 0.21 per cent.

Crude oil market, which has taken note of the not-so-encouraging economic indicators from China in the recent months, further witnessed another indicator where the China’s import declined in July.

Down for 5th month in a row

Market reports noted that China’s imports declined by 12.4 per cent year-on-year in July. The market was estimating the decline to be in the range of 5 per cent. The decline was 6.8 per cent a month earlier. Market reports also noted that this decline was fifth straight month of decrease since January.

This created apprehensions over the demand for crude oil in one of the major consumers in the world market.

However, the supply tightness in the market limited further decline in the prices. Crude oil market is already witnessing tight supply conditions following the recent decisions of Saudi Arabia and Russia to reduce production output. Market reports also noted that the leak in Druzhba oil pipeline in Russia and a recent attack on a Russian oil tanker by Ukraine could further impact the export of crude oil from Russia.

Market reports said Druzhba oil pipeline that connects Russia with Europe has the capacity to carry 2 million barrels a day of oil. However, the Polish pipeline operator PERN, which detected the leak in central Poland on Saturday, is hopeful of early resumption of supplies through this pipeline.

With the US summer season coming to an end, market players are of the opinion that there may not be many bigger inventory declines in the US in the coming days.

Guar gum gains, jeera slips

August natural gas futures were trading at ₹225.30 on MCX in the initial trading hour of Tuesday morning against the previous close of ₹227.80, down by 1.10 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), August guar gum contracts were trading at ₹12,405 in the initial trading hour of Tuesday morning against the previous close of ₹12,089, up by 2.61 per cent.

August jeera futures were trading at ₹61,710 on NCDEX in the initial trading hour of Tuesday morning against the previous close of ₹62,295, down by 0.94 per cent.

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