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Crude oil futures traded higher on Tuesday morning following the reported statement of the Saudi Oil Minister that the Organisation of Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, could cut production output to control the decline in oil prices.
At 9.54 am on Tuesday, October Brent oil futures were at $97.18, up by 0.73 per cent; and September crude oil futures on WTI were at $91.10, up by 0.82 per cent.
September crude oil futures were trading at ₹7,290 on the Multi Commodity Exchange (MCX) in the initial hour of Tuesday morning, against the previous close of ₹7,162, up by 1.79 per cent; and October futures were trading at ₹7,270 as against the previous close of ₹7,153, up by 1.64 per cent.
Citing the statement of the Saudi Energy Minister, Prince Abdulaziz bin Salman, to Bloomberg, the Saudi state news agency SPA, said OPEC stands ready to cut output to correct a recent oil price decline, driven by poor futures market liquidity and macro-economic fears. The latest developments do not reflect the fundamentals that show tightness in the crude oil market. He said OPEC+ has the means and flexibility to deal with challenges.
Quoting the Minister, the report said the oil futures market has fallen into ‘a self-perpetuating vicious circle of very thin liquidity and extreme volatility’, making the cost of hedging and managing risks for market participants prohibitive.
On Monday, Brent crude futures touched an intra-day low of $92.36 due to fears of a global recession and a potential supply boost from Iran.
Meanwhile, Iran accused the US of procrastinating in efforts to revive the 2015 nuclear deal. However, the US denied this charge. The revival of the deal will help increase crude oil supplies to the market, as it will help lift sanctions on Iranian oil.
Amidst these developments, Europe now faces a fresh disruption to energy supplies, following damage to a pipeline system bringing oil from Kazakhstan through Russia.
September natural gas futures were trading at ₹784.60 on MCX in the initial hour of Tuesday morning, against the previous close of ₹771.20, up by 1.74 per cent.
NCDEX
On the National Commodities and Derivatives Exchange (NCDEX), September dhaniya futures were trading at ₹11136 in the initial hour of Tuesday morning against the previous close of ₹11288, down by 1.35 per cent.
September cottonseed oilcake contracts were trading at ₹2717 on NCDEX in the initial hour of Tuesday morning against the previous close of ₹2750, down by 1.20 per cent.
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