Crude oil traded marginally lower on global exchanges on Wednesday morning with the market trying to find a level between a drop in inventories and the outlook for the economy.
Industry data showed a decline in the crude oil inventories in the US, a bullish factor for the energy commodity but rising Covid cases in China limited gains.
At 10.01 am on Wednesday, January Brent oil futures were at $88.18, down by 0.20 per cent, and January crude oil futures on WTI were at $80.80, down by 0.19 per cent.
December crude oil futures were trading at ₹6,644 on Multi Commodity Exchange (MCX) in the initial trading hour of Wednesday morning against the previous close of ₹6,720, down by 1.13 per cent.
January futures were trading at ₹6,660 as against the previous close of ₹6,730, down by 1.04 per cent.
Drop below expectations
Quoting the data from the American Petroleum Institute (API), market reports said the crude oil inventories in the US declined by 4.8 million barrels last week against the market expectations of a decline of 2.2 million barrels. This indicated the demand for the commodity.
However, the market is waiting for the release of the official data by the US EIA (Energy Information Administration) later in the day. This data will give an idea about the crude oil inventories in the US.
Another factor that helped crude oil prices was the uncertainty over Russia’s stand on the proposed price cap on Russian oil by G7 countries. Russia had earlier stated that it would not sell crude to those countries that follow the measures such as price caps as proposed by G7 countries.
Meanwhile, the increase in the number of Covid cases in China and the control measures associated with that impacted the demand for the commodity in the global market. China is a major consumer of crude oil.
According to the National Health Commission of China, 29,157 new Covid infections were reported in China on November 22. The number of cases is increasing in Beijing and Shanghai. Following this, the authorities are enforcing strict measures to control the spread of the disease.
Cottonseed oilcake up, guarseed down
December natural gas futures were trading at ₹615 on MCX in the initial trading hour of Wednesday morning against the previous close of ₹596.40, up by 3.12 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), December cottonseed oilcake contracts were trading at ₹2,715 in the initial trading hour of Wednesday morning against the previous close of ₹2,702, up by 0.48 per cent.
December guarseed futures were trading at ₹5,890 on NCDEX in the initial trading hour of Wednesday morning against the previous close of ₹5,976, down by 1.44 per cent.