Crude oil traded higher on Wednesday morning, fuelled by recent data showing signs of recovery in the US economy and market expectations that the US Federal Reserve may not resort to an aggressive interest rate hike later today.
At 10 am on Wednesday, April Brent oil futures were at $85.72, up by 0.30 per cent; and March crude oil futures on WTI were at $79.23, up by 0.46 per cent.
February crude oil futures were trading up by 0.48 per cent at ₹6,494 on Multi Commodity Exchange (MCX) in the initial trading hour of Wednesday morning, against the previous close of ₹6,463, and March futures were trading at ₹6,547 against the previous close of ₹6,508, up 0.60 per cent.
Hawkish stand
Market reports noted that the US Federal Reserve, which is meeting later in the day, may increase the interest rate by 25 basis points. They see the easing of inflation concerns in the US as a reason for this. The Fed had resorted to aggressive rate hikes in its previous meetings to control inflation in the US. This had led to fears that the US economy could face slowdown, impacting the demand for commodities such as crude oil.
Apart from this, OPEC+ (Organization of Petroleum Exporting Countries and its allies) is expected to conduct a virtual meeting later in the day. Market expects the proposed meeting to maintain the current oil production policy, as OPEC+ is awaiting clarity on matters such as the impact of economic reopening in China and sanctions on crude oil supply from Russia.
The gains in oil prices were limited by the latest data on crude oil inventories in the US.
A Reuters report, which cited the American Petroleum Institute data from market sources, said crude oil inventories went up by around 6.3 million barrels for the week ending January 27. This exceeded market expectations, it said.
Turmeric, guar gum gleam
February natural gas futures were trading at ₹231.30 on MCX in the initial trading hour of Wednesday morning against the previous close of ₹224.10, up by 3.21 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), April turmeric (farmer polished) contracts were trading at ₹7,414 in the initial trading hour of Wednesday morning against the previous close of ₹7,344, up by 0.95 per cent.
February guar gum futures were trading at ₹12,728 on NCDEX in the initial trading hour of Wednesday morning against the previous close of ₹12,682, up by 0.36 per cent.