Crude oil prices dropped in the global market early on Monday, worn down by concerns over the continued lockdown in China’s financial hub Shanghai and plans by the US and its allies to release crude oil from strategic petroleum reserves (SPRs).

At the time of filing this report, June Brent oil futures were at $100.54, down by 2.17 per cent, and May crude oil futures on WTI were at $95.64, lower by 2.67 per cent.

April crude oil futures were trading at ₹7,288 on Multi Commodity Exchange (MCX) in early Monday morning against the previous close of ₹7,378, down by 1.22 per cent, and May futures were at ₹7,280 against the previous close of ₹7364, a drop of 1.14 per cent.

Production activities hit

China, one of the major crude oil consumers globally, has put its biggest city – Shanghai – under lockdown to control the Covid spread Reports said the production activities have been affected in Shanghai and Shenyang cities due to Covid. These developments have led to the decrease in the demand from Chinese market.

The recent decision by some of the oil-consuming nations to release crude oil from their SPRs is also seen as a reason for the decline in the prices. While the US administration decided to release 180 million barrels of crude oil from its SPR recently, the International Energy Agency (IEA) member countries also decided to release around 60 million barrels from their SPRs. The decision was taken by these countries following the increase in the price of the commodity due to the Russia-Ukraine war. Russia, a major oil producing nation has been facing sanctions from the US and other European countries.

OPEC cartel unenthusiastic

Meanwhile, the reports also noted that the release of crude oil from SPRs may not enthuse the members of Organization of the Petroleum Exporting Countries (OPEC) and its allies to accelerate the production of crude oil even at $100 a barrel.

In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said crude oil prices recovered from their lows and settled on a positive note on Friday, but on weekly basis, the price fell for a second week. In early Asian trading on Monday, crude trades 2 per cent down after hefty release of strategic reserves by many countries However, the price is getting support on supply concerns from Russia due to sanctions imposed by the western countries.

“We expect crude oil prices to remain volatile to negative in today’s session. Crude oil is having support at $92.80-$90.50 and resistance is at $98.20–100.50, In rupee terms crude oil has support at ₹7,140-6,960; while resistance is at ₹7,550–7,770,” he said.

April menthaoil futures were trading at ₹1103.90 on MCX in the initial hour of Monday morning against the previous close of ₹1136.50, down by 2.87 per cent.

April aluminium contracts were trading at ₹274.10 on MCX in the early deals of Monday against the previous close of ₹276.70, down by 0.94 per cent.

Dhaniya up, turmeric down

On the National Commodities and Derivatives Exchange (NCDEX), April dhaniya futures were trading at ₹12,470 in the early deals against the previous close of ₹12,334, up by 0.29 per cent.

April turmeric (farmer polished) contracts were trading at ₹9,308 on NCDEX in the initial hour of Monday morning against the previous close of ₹9,392, down by 0.89 per cent.

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