Crude oil futures traded higher on Thursday morning as the US Federal Reserve pointed at possible interest rate cuts in the coming months. Added to this, official data showed a decline in crude oil inventories in the US.

At 9.52 am on Thursday, April Brent oil futures were at $80.89, up by 0.42 per cent, and March crude oil futures on WTI (West Texas Intermediate) were at $76.20, up by 0.46 per cent.

February crude oil futures were trading at ₹6,333 on the Multi Commodity Exchange (MCX) during initial trading, against the previous close of ₹6,313, up by 0.32 per cent; and March futures were trading at ₹6,348, as against the previous close of ₹6,330, up by 0.28 per cent.

‘Interest rate has peaked’

As expected, the meeting of the US Federal Open Market Committee (FOMC) on Wednesday kept interest rates unchanged at 5.25-5.5 per cent.

The Chairman of the US Federal Reserve, Jerome Powell, said interest rates had peaked and would come down in the coming months. However, the Fed is not expected to reduce rates till it gains confidence that inflation is moving sustainably towards its target of 2 per cent.

Addressing media after the meeting, Powell said it will be appropriate to begin reducing rates sometime this year. He said the Fed will continue to make decisions on a meeting-by-meeting basis, and he does not think a rate cut is likely in March.

Lower interest rates will help boost growth in the economy. This, in turn, will create demand for commodities such as crude oil. The US is a major buyer of crude oil in the global market.

The weekly petroleum status report by the US EIA (Energy Information Administration) showed a decline in crude oil inventories in the US. Commercial crude oil inventories in the US increased by 1.2 million barrels for the week ending January 26, from the previous week. At 421.9 million barrels, US crude oil inventories were 5 per cent below the five-year average for this time of year. The market was expecting a decline of 0.217 million barrels during the period.

Total products supplied over the last four-week period averaged 19.8 million barrels a day, up 2.1 per cent from the same period last year.

Jeera edges up, turmeric slips

February natural gas futures were trading at ₹180.10 on MCX, against the previous close of ₹177.20, up by 1.64 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), March jeera contracts were trading at ₹27,300 against the previous close of ₹27,110, up by 0.70 per cent.

April Turmeric (farmer polished) futures were trading at ₹13,998 on NCDEX in the initial trading hour of Thursday morning, against the previous close of ₹14,096, down by 0.70 per cent.

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