Crude oil futures traded lower on Wednesday morning after industry data showed an increase in inventories in the US for the week ending January 31.

At 9.55 am on Wednesday, April Brent oil futures were at $75.82, down by 0.50 per cent, and March crude oil futures on WTI (West Texas Intermediate) were at $72.46, down by 0.33 per cent.

February crude oil futures were trading at ₹6322 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹6343, down by 0.33 per cent, and March futures were trading at ₹6306 against the previous close of ₹6328, down by 0.35 per cent.

According to the industry body American Petroleum Institute (API), crude oil inventories in the US increased by 5.025 million barrels for the week ending January 31. This was far above the market expectation of 2 million barrels increase. An increase in the inventories could signal the weak demand for the commodity, which, in turn, could impact the price of the commodity.

US is a major consumer of crude oil in the global market. However, the official data from the US EIA (Energy Information Administration), which is expected later on Wednesday, will give a clear picture on crude oil inventory levels in the US for the week ending January 31.

In his Commodities Feed for Wednesday, Warren Patterson, Head of Commodities Strategy of ING Think, said Tuesday’s downward pressure for oil came from China announcing retaliatory tariffs against the US, which included targeting US energy flows. However, countering this later in the session was Trump signing a directive to increase economic pressure on Iran by enforcing sanctions more strictly and so putting a large share of Iranian oil exports at risk, he said.

Trump’s directive to increase economic pressure on Iran shouldn’t come as too much of a surprise given that he was hawkish towards Iran during his first term and reimposed oil sanctions against Iran back then. These sanctions were never lifted by Joe Biden, but they were not enforced strictly, particularly after Russia invaded Ukraine, he said.

“Therefore, stricter enforcement could see as much as 1 million barrels a day of supply at risk. However, reduced flows from Iran will not help in lowering oil prices, something that President Trump is very keen to achieve. He would need to see OPEC increase oil output (something he has already called for) to offset any potential Iranian losses. However, convincing the Saudis and other members to increase output may prove difficult at current price levels,” he said.

February natural gas futures were trading at ₹282 on MCX during the initial hour of trading on Wednesday against the previous close of ₹287.50, down by 1.91 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), February castorseed contracts were trading at ₹6449 in the initial hour of trading on Wednesday against the previous close of ₹6438, up by 0.17 per cent.

February cottonseed oilcake futures were trading at ₹2684 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹2692, down by 0.30 per cent.

Published on February 5, 2025