Crude oil futures gained on Multi Commodity Exchange (MCX) on Thursday morning, though the Brent crude oil futures remained below $100 a barrel. Meanwhile, factors such as IEA’s (International Energy Agency) forecast of decline in the demand for oil during 2022.

At the time of filing this report, May Brent oil futures were at $99.80, down by 0.11 per cent; and April crude oil futures on WTI at $96.58, up by 1.62 per cent.

March crude oil futures were trading at ₹7,339 on MCX in the initial hour of Thursday morning against the previous close of ₹7,296, up by 0.59 per cent; and April futures were trading at ₹7,259 against the previous close of ₹7,205, up by 0.75 per cent.

Danger of oil supply shock

IEA’s Oil Market Report for March noted that the surging commodity prices and international sanctions levied against Russia following its war with Ukraine are expected to appreciably depress global economic growth.

IEA said it has revised down its forecast for world oil demand by 1.3 million barrels a day for the second to fourth quarter of 2022, resulting in 950,000 barrels a day slower growth for 2022 on average.

“Total demand is now projected at 99.7 million barrels a day in 2022, an increase of 2.1 million barrels a day from 2021,” it said.

The report also noted that the prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock.

“We estimate that from April, 3 million barrels a day of Russian oil output could be shut in as sanctions take hold and buyers shun exports. OPEC+ is, for now, sticking to its agreement to increase supply by modest monthly amounts. Only Saudi Arabia and the UAE hold substantial spare capacity that could immediately help to offset a Russian shortfall,” it said.

Meanwhile, the Weekly Petroleum Status Report for the week ending March 11, which was released by the US Energy Information Administration on Wednesday, said that US crude oil imports averaged 6.4 million barrels a day last week, up by 76,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6.3 million barrels a day, 15.7 per cent more than the same four-week period last year.

The report also noted that the US commercial crude oil inventories (excluding those in the strategic petroleum reserve) increased by 4.3 million barrels from the previous week. At 415.9 million barrels, US crude oil inventories are about 12 per cent below the five-year average for this time of year, it said.

In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said crude oil prices fell in third straight session amid progress on Russia-Ukraine ceasefire talks and rising US inventories. Ukraine's president said the positions of Ukraine and Russia were sounding more realistic, but time was needed. Russia’s foreign minister also said that some deals with Ukraine were close to being agreed. Progress on the Russia-Ukraine for de-escalation of war pushed crude oil prices lower. He said the crude oil inventories in the US increased by 4.3 million barrels against expectations of decline of 1.8 million barrels. This also put oil price in pressure.

“Crude oil has support at $92.20–90.50 and resistance is at $97.20–99. In rupee terms, crude oil has support at ₹7,110-7,000; while resistance is at ₹7,550–7,680,” he said.

March natural gas futures were trading at ₹360.30 on MCX in the initial hour of Thursday morning against the previous close of ₹361.80, down by 0.41 per cent.

NCDEX

On the National Commodities and Derivatives Exchange (NCDEX), April castor seed contracts were trading at ₹7310 in the initial hour of Thursday morning against the previous close of ₹7266, up by 0.61 per cent; and May castor seed contracts were trading at ₹7384 against the previous close of ₹7322, up by 0.85 per cent.

April steel long futures were trading at ₹56200 on NCDEX in the initial hour of Thursday morning against the previous close of ₹56,770, down by 1 per cent.

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