Crude oil futures traded higher on Wednesday morning as an OPEC (Organization of Petroleum Exporting Countries) report forecast crude oil demand recovery in China in 2023. This helped cool the sentiments in the crude oil market, affected due to the recent bank failures in the US.

At 9.55 am on Wednesday, May Brent oil futures were at $78.52, up by 1.38 per cent, and April crude oil futures on WTI were at $72.42, up by 1.53 per cent.

March crude oil futures were trading at ₹5,972 on Multi Commodity Exchange (MCX) during initial trading against the previous close of ₹5,983, down by 0.18 per cent, and April futures were trading at ₹6,021 against the previous close of ₹6,029, down by 0.13 per cent.

Demand driver

OPEC Monthly Oil Market Report, which was released on March 14, said the world oil demand growth forecast for 2023 remains unchanged at 2.3 million barrels a day. For China, the report said it is revised higher, with jet/kerosene and gasoline leading demand growth.

It said that oil demand is set to see year-on-year growth of 0.5 million barrels a day in China during the first quarter of 2023. Jet/kerosene will be the driver of the demand recovery. Domestic and international airline activity is expected to rise with the increase in international business and tourism due to the removal of quarantine periods for international travellers arriving in China. This is also providing support for the jet fuel demand recovery. Gasoline demand will also improve significantly, driven by a strong rebound in mobility, it said.

For the second quarter of 2023, the report said Chinese oil demand is expected to increase year-on-year by 1 million barrels a day. Jet fuel will again drive oil demand growth in this quarter, with millions of air passengers expected to support air travel activity during the Golden Week holiday in May, combined with further pent-up demand and business travellers from and into China, it added.

The US inflation data, which was released on Tuesday, was in line with the expectations of the market. With this, now the market is hoping that the US Fed Reserve may not go in for aggressive interest rate hikes in its next week’s meeting.

According to market reports, an aggressive interest rate hike in the US over the past year was one of the reasons for the failure of Silicon Valley Bank and Signature Bank there. These failures created panic in the US banking industry.

Cottonseed oilcake, guarseed gain

March natural gas futures were trading at ₹213.60 on MCX during initial trading against the previous close of ₹212.10, up by 0.71 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), March cottonseed oilcake contracts were trading at ₹2,547 in the initial trading hour of Wednesday morning against the previous close of ₹2,528, up by 0.75 per cent.

March guarseed futures were trading at ₹5,634 on NCDEX during initial trading against the previous close of ₹5,602, up by 0.57 per cent.