Crude oil drops below $100/ barrel on higher US inventory, OPEC move to hike output

BL Mangaluru Bureau | | Updated on: Aug 04, 2022

The US commercial crude oil stocks were up 4.5 million barrels; OPEC+ to add 100,000 barrels a day for Sept

Crude oil futures traded lower on Thursday morning following an unexpected increase in its inventories in the US. The decision of OPEC (Organization of the Petroleum Exporting Countries) and its allies, known as OPEC+, to increase the crude oil output by a meagre 100,000 barrels a day also dragged the futures lower.

At 10.01 am, October Brent oil futures were at $97.03, down by 3.49 per cent; and September crude oil futures on WTI were at $90.80, up by 0.15 per cent.

August crude oil futures were trading at ₹7,259 on the Multi Commodity Exchange (MCX) in the early trade against the previous close of ₹7,261, down by 0.03 per cent; and September futures were trading at ₹7,212 against the previous close of ₹7209, up by 0.04 per cent.

The petroleum status report of the US EIA (Energy Information Administration) for the week ending July 29, released on August 3, showed an increase in the US commercial crude oil inventories (excluding those in the strategic petroleum reserve) by 4.5 million barrels from the previous week.

US demand down

The US EIA report indicated a decline in the supply of products as over the last four-week’s supplies averaged 19.9 million barrels a day, down by 3 per cent from the same period last year.

Over the past four weeks, motor gasoline product supplied averaged 8.6 million barrels a day, down by 8.8 per cent from the same period last year. Distillate fuel product supplied averaged 3.7 million barrels a day over the past four weeks, down by 2.5 per cent from the same period last year. Jet fuel product supplied was down 0.7 per cent compared with the same four-week period last year.

The US crude oil refinery inputs averaged 15.9 million barrels a day during the week ending July 29, which was 174,000 barrels a day less than the previous week’s average. Refineries operated at 91 per cent of their operable capacity last week.

Gasoline production decreased last week, averaging 9.3 million barrels a day. Distillate fuel production decreased last week, still averaging 4.9 million barrels a day.

OPEC meeting

The 31st OPEC+ ministerial meeting on August 3 decided to raise the production level for OPEC and non-OPEC participating countries by 100,000 barrels a day for September.

Market analysts termed it as a setback to the attempts of the US President Joe Biden to convince Arab leaders to produce more crude oil. Biden had recently visited them seeking an increase in the production of crude oil.

The OPEC+ meeting noted that the severely limited availability of excess capacity necessitates utilizing it with great caution in response to severe supply disruptions. It also noted that the chronic underinvestment in the oil sector has reduced excess capacities along the value chain.

The meeting highlighted that insufficient investment into the upstream sector will impact the timely availability of adequate supplies to meet the growing demand beyond 2023 from non-participating non-OPEC oil-producing countries, some OPEC member countries and participating non-OPEC oil-producing countries.

Jeera up, turmeric down

August natural gas futures were trading at ₹656.50 on MCX in the initial hour of Thursday morning against the previous close of ₹633.70, up by 3.60 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), August jeera futures were trading at ₹23,935 in the initial hour of Thursday morning against the previous close of ₹23,810, up by 0.52 per cent.

August turmeric (farmer polished) contracts were trading at ₹7,480 on NCDEX in the initial hour of Thursday morning against the previous close of ₹7,506, down by 0.35 per cent.

Published on August 04, 2022
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