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The prospects of more Covid-related control measures in China and the chances of further interest rate hikes in the US due to rising inflation dragged crude oil futures to $120 a barrel on Monday morning.
At 10.25 am on Monday, August Brent oil futures were at $120.07, down by over 1.5 per cent, and July crude oil futures on WTI were at $118.67, down by nearly two per cent.
June crude oil futures were trading at ₹9,302 on Multi Commodity Exchange (MCX) in the initial hour of Monday morning against the previous close of ₹9,399, down by 1.03 per cent; and July futures were trading at ₹9,125 as against the previous close of ₹9,214, down by 0.97 per cent.
New Chinese cases from a bar
Chaoyang district in Beijing has decided to take three rounds of mass testing to control the spread of Covid in the region. Though the region was under lockdown since April, some cases of Covid were reported from a bar after the restrictions were relaxed last week. According to the health officials of Chaoyang, mass testing will be conducted from Monday to Wednesday.
Shanghai, which is the another region that was under lockdown for almost two months, has also decided to take up mass Covid testing of its residents.
China is a major consumer of crude oil in the global market, and the long lockdown in that country had impacted the demand for crude oil in the global markets.
Inflation figures in the US touched a 40-year high of 8.6 per cent in May. Market feels that this could lead to aggressive interest rate hikes from the US Federal Reserves.
In his outlook for the day, Saish Sandeep Sawant Dessai, Research Associate, Base Metals, Angel One Ltd, said as oil trades near 13-week highs, prices are expected to remain elevated on the back of steady demand from the US, and the refiners have scaled up their production to pre-pandemic levels.
Natural gas heads south
June natural gas futures were trading at ₹676.10 on MCX in the initial hour of Monday morning against the previous close of ₹693.40, down by 2.49 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), June steel long futures were trading at ₹48,980 in the initial hour of Monday morning against the previous close of ₹47,920, up by 2.21 per cent.
June guargum contracts were trading at ₹10932 on NCDEX in the initial hour of Monday morning against the previous close of ₹11106, down by 1.57 per cent.
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