Crude oil futures head north on tight supplies

BL Mangaluru Bureau | | Updated on: Jun 28, 2022

UAE says it is producing oil to near-capacity; Saudi can pump up another 150,000 barrels a day

Crude oil futures traded higher on Tuesday morning following the tight supply situations in the global market.

At 10.04 am on Tuesday, August Brent oil futures were at $116.67, up by 3.13 per cent; and August crude oil futures on WTI were at $110.90, up by 1.21 per cent.

July crude oil futures were trading at ₹8,718 on Multi Commodity Exchange (MCX) in the initial hour of Tuesday morning against the previous close of ₹8,638, up by 0.93 per cent; and August futures were trading at ₹8,503 as against the previous close of ₹8,418, up by 1.01 per cent.

Limited headroom

Contrary to the expectations of the global oil markets that the UAE and Saudi Arabia have spare crude oil production capacity, the UAE made it clear that it is producing near to the maximum capacity.

Speaking to state news agency WAM on Monday, UAE Energy Minister Suhail al-Mazrouei said: “In light of recent media reports, I would like to clarify that the UAE is producing near to our maximum production capacity based on its current OPEC+ production baseline (3.168 million barrels a day) which UAE is committed by until the end of the agreement.”

French President Emmanuel Macron confirmed this to US President Joe Biden on the sidelines of G-7 meeting. He said the UAE and Saudi Arabia, who were seen as the countries with spare capacity in OPEC can barely increase oil production. According to him, the UAE was producing at maximum capacity, and Saudi Arabia could increase output by only 150,000 barrels a day, which is below its nameplate spare capacity of around 2 million barrels a day.

The supply situation is further affected in the global markets as two more producers—Libya and Ecuador—are facing protests in their countries affecting the production of crude oil. The National Oil Corporation of Libya said Monday that it might have to declare force majeure in the Gulf of Sirte area unless oil terminals there resume operations. The Energy Ministry of Ecuador said the country could suspend oil output completely amid anti-government protests.

Cotton blooms

July cotton futures were trading at ₹42,060 on MCX in the initial hour of Tuesday morning against the previous close of ₹41,510, up by 1.32 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), July guar gum futures were trading at ₹9,731 in the initial hour of Tuesday morning against the previous close of ₹9,679, up by 0.54 per cent.

July jeera contracts were trading at ₹21420 on NCDEX in the initial hour of Tuesday morning against the previous close of ₹21320, up by 0.47 per cent.

Published on June 28, 2022
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