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An estimate by the American Petroleum Institute (API) of a huge decline in the US crude oil inventories in the already tight global market helped the crude oil market to recover on Wednesday morning. In the meantime, the market is also hoping for some progress in the Russia-Ukraine peace talks to ease the situation. At the time of filing this report, May Brent oil futures were at $111.12, down by 1.20 per cent, and May crude oil futures on WTI at $105.15, up by 0.87 per cent.
April crude oil futures were trading at ₹7,966 on the Multi Commodity Exchange (MCX) during the initial hours of Wednesday morning against the previous close of ₹7,910, up by 0.71 per cent, and May futures were trading at ₹7,828 against the previous close of ₹7,781, up by 0.60 per cent.
Quoting market sources, news agencies reported that API has reported a decline of around 3 million barrels of crude stock inventories in the US for the week ending March 25. The estimated decline was more than the market expectations.
Though there are signs of progress in the peace talks between Russia and Ukraine after Russia promised to scale down its military operations in two Ukrainian cities, market reports felt that the recovery in prices indicates that there is scepticism over the progress in the peace talks.
OPEC+ may not raise output
Market reports were also of the view that the OPEC+ members are unlikely to increase crude oil output above the agreed level of 4 lakh barrels a day in their meeting scheduled on Thursday. The major producing countries such as Saudi Arabia and the UAE said they would not look at taking action against Russia for the current situation, as the OPEC+ is aiming at stabilising the market and not at engaging in politics.
In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said oil prices were trading down on Tuesday as it appeared that Ukraine and Russia had made some progress in their peace talks, but oil prices recouped losses as API reported large crude oil inventory draw.
Crude oil prices also slipped amid lockdowns in the biggest commercial city of China due to rising Covid cases. “We expect crude oil prices to remain volatile in today’s session ahead of Thursday’s OPEC+ meeting. Crude oil is having support at $101.70-98.40 and resistance is at $107.00-110.20. In rupee terms, crude oil has support at ₹7,740-7,550; while resistance is at ₹8,100-8,240,” he said.
April natural gas futures were trading at ₹399.60 on MCX in the initial hour of Wednesday morning against the previous close of ₹409.80, down by 2.49 per cent.
NCDEX
On the National Commodities and Derivatives Exchange (NCDEX), April steel long futures were trading at ₹57,200 in the initial hour of Wednesday morning against the previous close of ₹58,040, down by 1.45 per cent. April cottonseed oilcake futures were trading at ₹3,275 on NCDEX in the initial hour of Wednesday morning against the previous close of ₹3,307, down by 0.97 per cent.
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