A surprise announcement by OPEC (Organization of the Petroleum Exporting Countries) and its allies including Russia (a group known as OPEC+) to cut crude oil production pushed the energy commodities higher in the global market on Monday morning.
At 9.53 am on Monday, June Brent oil futures were at $84.07, up by 5.23 per cent, and May crude oil futures on WTI were at $79.70, up by 5.33 per cent.
April crude oil futures were trading at ₹6,577 on Multi Commodity Exchange (MCX) during initial trading against the previous close of ₹6,199, up by 6.10 per cent, and May futures were trading at ₹6,612 as against the previous close of ₹6245, up by 5.88 per cent.
Saudi to axe more
On Sunday, OPEC+ announced a further cut in crude oil production output of around 1.16 million barrels a day. The market was not expecting this production cut and it came as a surprise.
The major portion of this production cut will be contributed by Saudi Arabia at 5,00,000 barrels a day, followed by Iraq at 2,11,000 barrels a day, and the United Arab Emirates at 1,44,000 barrels a day.
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Other members such as Kuwait and Kazakhstan are expected to contribute around 1,28,000 barrels a day and 78,000 barrels a day, respectively. The production cut will begin in May and will be in force till the end of 2023.
At a time when economic activities are gaining momentum in China, one of the major consumers of crude oil, any production cut will lead to tightness in the crude oil market.
Guar gum up
April natural gas futures were trading at ₹174.90 on MCX against the previous close of ₹183.80, down by 4.84 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), April guar gum contracts were trading at ₹11,867 during initial trading against the previous close of ₹11,746, up by 1.03 per cent.
April cottonseed oilcake futures were trading at ₹2,802 on NCDEX against the previous close of ₹2,817, down by 0.53 per cent.