Crude oil futures traded lower on global exchanges on Thursday following reports of mass testing and an increase in the number of Covid cases in China (a major consumer of the energy commodity). Reports related to the increase in the commercial crude oil inventories in the US also added to this development.

At 10.30 am, June Brent oil futures were at $103.84, down by 1.09 per cent; and June crude oil futures on WTI were at $100.62, down by 1.37 per cent.

May crude oil futures were trading at ₹7,729 on Multi Commodity Exchange (MCX) during the initial hours of trading against the previous close of ₹7,787, down by 0.74 per cent, and June futures were trading at ₹7,648 against the previous close of ₹7,724, down by 0.98 per cent.

Reports said China began mass testing of Covid cases in Beijing following the outbreak of the disease in the city. Another city, Shanghai, faced strict lockdown due to the outbreak of Covid in the region.

Reports also said China's Hangzhou city, which has a population of 12.2 million, will begin mass testing for Covid cases from today (April 28).

The outbreak of the disease in China will likely have an impact on the consumption of the crude oil.

US inventories rise

The Petroleum Status Report for the week ending April 22, which was released by the US Energy Information Administration on April 27, showed an increase in the commerical crude oil inventories during the period. The US commercial crude oil inventories (excluding those in the strategic petroleum reserve) increased by 0.7 million barrels from the previous week. At 414.4 million barrels, US crude oil inventories are about 16 per cent below the five-year average for this time of year.

US crude oil imports averaged 5.9 million barrels a day last week, up by 98,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6 million barrels a day, 0.3 per cent less than the same four-week period last year.

Saish Sandeep Sawant Dessai, Research Associate (Base Metals) of Angel One Ltd, said prices of crude are under pressure after the recent outbreak of Covid cases in the capital city of China. However, mass testing of people was being carried out at the city of Beijing in order to avert the city-wide lockdown.

Further, aid to the crude prices came as the market is concerned about the tight worldwide energy supply following Russia's invasion of Ukraine and subsequent sanctions slapped on Moscow by the United States and its allies.

He said China’s central bank in a statement said it would step up monetary policy support as Beijing races to stamp out Covid outbreak to avoid Shanghai type lockdown

In his outlook for crude oil, he said: “Crude might continue to trade on a lower note given the weaker demand from the major oil-importing country, as new Covid cases were reported in the capital city of Beijing.”

Base metals

On base metals, he said the pack had ended on a mixed note on Wednesday, like copper, aluminium, and nickel managed to close on a positive note.

Copper prices ended a positive for the second straight session, as the protests at the Las Bambas mine in Peru is likely to end soon.

However, it was unclear if the Las Bambas would be able to restart production in the short term, which would eventually affect the 20 per cent of the l copper output

In his outlook, he said: “We expect copper to trade lower towards ₹775 levels, a break of which could prompt the price to move lower to ₹756 levels.”

Cotton

May cotton futures were trading at ₹44,770 on MCX in the early trade against the previous close of ₹44,650, up by 0.27 per cent.

Tumeric loses gleam

On the National Commodities and Derivatives Exchange (NCDEX), May steel long futures were trading at ₹56,200 in the initial hour of Thursday against the previous close of ₹55,310, up by 1.61 per cent.

May turmeric (farmer polished) contracts were trading at ₹8,726 on NCDEX against the previous close of ₹8738, down by 0.14 per cent.

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