Crude oil futures marginally up on global exchanges

Despite an increase in the interest rate by the European Central Bank, and an increase in the crude oil inventories in the US, crude oil futures traded marginally higher on major global exchanges on Friday morning.

At 10.02 am on Friday, November Brent oil futures were at $89.53, up by 0.43 per cent; and October crude oil futures on WTI were at $83.77, up by 0.28 per cent.

September crude oil futures were trading at ₹6690 on Multi Commodity Exchange (MCX) in the initial trading hour of Friday morning against the previous close of ₹6699, down by 0.13 per cent; and October futures were trading at ₹6690 as against the previous close of ₹6697, down by 0.10 per cent.

On Thursday, European Central Bank increased the lending rate by 75 basis points, and promised further hikes to control inflation. This is the biggest ever increase in interest by European Central Bank aimed at controlling inflation.

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Meanwhile, the Chairman of US Federal Reserve, Jerome Powell, said on Thursday that US is strongly committed to fight inflation. Though Powell did not mention anything about the interest rate hike, market analysts felt that there could be another round of interest rate hike to control inflation in US.

US inventories

The Petroleum Status Report by the US EIA (Energy Information Administration) for the week ending September 2, which was released on September 8, showed that the US commercial crude oil inventories (excluding those in the strategic petroleum reserve) increased by 8.8 million barrels from the previous week. At 427.2 million barrels, US crude oil inventories were about 3 per cent below the five-year average for this time of year.

US crude oil imports averaged 6.8 million barrels a day last week, an increase of 824,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6.3 million barrels a day, 1.5 per cent more than the same four-week period last year.

However, the total products supplied over the last four-week period averaged 20.1 million barrels a day, down by 6.4 per cent from the same period last year.

US crude oil refinery inputs averaged 15.9 million barrels a day during the week ending September 2, which was 310,000 barrels a day less than the previous week’s average. Refineries operated at 90.9 per cent of their operable capacity last week. Gasoline production increased last week, averaging 9.9 million barrels a day. Distillate fuel production increased last week, averaging 5 million barrels a day.

Meanwhile, Covid-driven lockdown was extended in Chengdu city of China (a major crude oil consumer) on Thursday as the country follows the zero-Covid policy. Such developments are impacting the economy of that country impacting the demand outlook for the commodity.

Zinc up, steel down

September zinc futures were trading at ₹290.70 on MCX in the initial trading hour of Friday morning against the previous close of ₹283.45, up by 2.56 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), September cottonseed oilcake contracts were trading at ₹2449 in the initial trading hour of Friday morning against the previous close of ₹2432, up by 0.70 per cent.

September steel long futures were trading at ₹49450 on NCDEX in the initial trading hour of Friday morning against the previous close of ₹49580, down by 0.26 per cent.

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