Crude oil went up on Monday morning as the banking crisis in the US due to the failure of Silicon Valley Bank (SVB) led to the market hoping that the Fed Reserve will soften its hawkish tone on interest rates.
At 9.57 am on Monday, May Brent oil futures were up by 0.23 per cent at $82.97 and April crude oil futures on WTI were up by 0.27 per cent at $76.89.
March crude oil futures were up by 0.11 per cent at ₹6,306 on Multi Commodity Exchange (MCX) during initial trading against the previous close of ₹6,299 and April futures were up by 0.08 per cent at ₹6,344 against the previous close of ₹6,339.
Economic cracks
Many in the market feel that the failure of SVB was due to the economic cracks caused by the aggressive increase in the interest rates by the US Federal Reserve. Market reports noted that the banking crisis in the US could put brakes on aggressive interest rate hikes by the Fed.
The weakness in the dollar following the intervention of the Fed and other regulators in the US due to the failure of SVB helped the crude oil market. A weaker dollar makes the commodities cheaper for foreign buyers holding other currencies. This in turn helps boost the demand for crude oil in the market. However, the market was cautious about the economic implications of the failure of SVB.
Also read: PNC, RBC interest in SVB cools as regulators seek rescue bids
Added to this, the comments from the Chief Executive Officer of Saudi Aramco, Amin Nasser, that he was cautiously optimistic over a recovery in demand in the tightly balanced crude oil market also helped the commodity’s prices in the market.
Market reports also noted that the decision by Saudi Arabia and Iran to re-establish diplomatic ties will provide stability in the market.
Turmeric, dhaniya decline
March copper futures were trading at ₹757.35 on MCX against the previous close of ₹752.65, up by 0.62 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), April dhaniya contracts were trading at ₹6,838 against the previous close of ₹6938, down by 1.44 per cent.
April turmeric (farmer polished) futures were trading at ₹6,836 on NCDEX against the previous close of ₹6,914, down by 1.13 per cent.