Comments
Crude oil futures traded lower on Monday morning following concerns over weak demand for the commodity.
At 10.04 am on Monday, November Brent oil futures were at $91.55, down by 1.39 per cent, and October crude oil futures on WTI were at $85.41, down by 1.59 per cent.
September crude oil futures were trading at ₹6,815 on Multi Commodity Exchange (MCX) in the initial trading hour of Monday morning against the previous close of ₹6,909, down by 1.36 per cent; and October futures were trading at ₹6,814 as against the previous close of ₹6894, down by 1.16 per cent.
Market analysts feel that the interest rate hikes by some economies to control inflation in their countries, and Covid-related curbs in China can impact the demand for the commodity in the global market.
ECB rases rates by 75 bps
In its efforts to control inflation, European Central Bank raised the lending rate by 75 basis points last week. Apart from this, it also promised further hikes to control inflation. Market analysts feel that US Federal Reserve could also initiate another rate hike during this month. The Chairman of US Federal Reserve, Jerome Powell, had said last week that US is strongly committed to fight inflation.
Such rate hikes lead to the increase in the value of US dollar. The commodity becomes expensive for investors in a dollar-denominated crude oil market thus affecting its demand.
China’s zero-Covid policy and curbs such as lockdowns in many cities are impacting the economy of that country. Being a major consumer of crude oil in the global market, any slowdown in economy impacts the demand for crude oil.
The US and some European nations are pushing for a price cap on Russian oil to limit Russia’s revenue source. However, this has not gone well with the Russian President, Vladimir Putin. He has threatened to stop energy exports to Europe, if such a price cap materialises.
In his outlook for the day, Prathamesh Mallya, AVP (Research, Non-Agri Commodities, and Currencies), Angel One Ltd, said: “We expect crude to trade lower towards ₹6,590 levels, a break of which could prompt the price to move lower to ₹6,450 levels.”
September natural gas futures were trading at ₹643.10 on MCX in the initial trading hour of Monday morning against the previous close of ₹638.90, up by 0.66 per cent.
Comments
COMMENT NOW
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.