Crude oil prices headed lower on Friday morning in the global market on an increase in the margin rates for Brent crude futures and the possible release of crude oil from reserves by the US and its allies.
At the time of filing this report, May Brent oil futures were at $118.75, down by 2.34 per cent; May crude oil futures on WTI at $112.31, down by 0.03 per cent.
April crude oil futures were trading at ₹8,573 on Multi Commodity Exchange (MCX) in the initial hour of Friday morning against the previous close of ₹8,666, down by 1.07 per cent; May futures were trading at ₹8,389 against the previous close of ₹8,488, down by 1.17 per cent.
One of the important developments in futures trading was the increase in the margin rates for Brent futures. Those trading in benchmark Brent crude futures will have to pay more as the Intercontinental Exchange (ICE) has increased the margin rates for Brent futures by 19 per cent for the May contract. This is the third increase this year.
Margin rates for futures trade are increased when the market conditions are volatile. Following this, the traders will have to increase deposit they hold at the exchange for each contract.
Reports said the US and its allies are planning a coordinated release of crude oil from their oil reserves. Reuters reported that the US is also planning to announce a deal to supply more US LNG to Europe.
In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said, “Crude oil prices cooled off on Thursday after the EU abstained from fresh action on the Russian oil. EU leaders, along with NATO and Group of Seven members, gathered in Brussels on Thursday to assess their response to Russia’s month-old invasion of Ukraine. There is no consensus among the EU on cracking down on Russian oil with opposition from nations, including Austria, he said.
Still, US President Joe Biden remains in the region on Friday, and the administration may yet unveil measures to help Europe reduce flows of Russian natural gas.
The US could pump additional oil into the system and could also help the EU to supply natural gas to reduce dependence on the Russian oil and gas.
“We expect crude oil prices to remain volatile in today’s session ahead of the US President meeting outcomes with the NATO and EU leaders. WTI crude oil is having support at $108.00–104.50 and resistance is at $114.00–118.50. In rupee terms crude oil has support at ₹8,540-8,410, while resistance is at ₹8,770–8,940.” he said.
April zinc futures were trading at ₹337.50 on MCX in the initial hour of Friday morning against the previous close of ₹333.85, up by 1.09 per cent.
Guar gum gains
On the National Commodities and Derivatives Exchange (NCDEX), April guar gum futures were trading at ₹11490 during initial hours of trading against the previous close of ₹11,316, up by 1.54 per cent.
April steel long contracts were trading at ₹58,510 on NCDEX in the initial hour of Friday morning against the previous close of ₹59,430, down by 1.55 per cent.