Brent crude oil futures gained further on Wednesday on Russia’s announcement to stop natural gas supplies to Poland and Bulgaria and China’s plans to step up the prudent monetary policy to support its Covid-affected economy.
At 10.20 am, June Brent oil futures were at $105.43, up by 3.03 per cent, and June crude oil futures on WTI were at $101.91, up by 0.21 per cent.
May crude oil futures were trading at ₹7,830 on Multi Commodity Exchange (MCX) in the early trade against the previous close of ₹7,869, down by 0.50 per cent; and June futures were trading at ₹7,760 against the previous close of ₹7,794, down by 0.44 per cent.
Russia’s decision to stop natural gas supply to Poland and Bulgaria comes at a time when the world is facing energy crisis following economic sanctions imposed by the US, UK and other European nations.
Russia announced its decision to stop the supply of natural gas to Poland and Bulgaria, as these countries did not agree to Russia’s demand to pay the energy imports in ruble.
The reported move by China to step up prudent monetary policy to support its economy affected by Covid ourbreak and lockdowns in some regions of the country is likely to increase the demand for crude oil. China is one of the major consumers of crude oil in the global market.
In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said, oil prices were trading up on Wednesday after Tuesday's brief sell-off, as China's central bank promised monetary policy support to prop up the economy after the lockdown.
He said the price moves remain a testament to the hyper volatility that exists in the market post-Covid and post-Russian invasion. In international markets, crude oil prices gained more than 5 per cent, as WTI crude settled at $101.70 a barrel and Brent settled at $105.13 a barrel. Domestic markets also settled on a positive note at ₹7,869 a barrel, up by 5.64 per cent. Natural gas prices also gained and crossed $7 per BTU on Tuesday on supply concerns from Russia, he said.
However, concerns over demand weighed on futures, as authorities in Beijing raced to stamp out a nascent Covid outbreak, he said.
“We expect crude oil prices to remain volatile in today’s session. Crude oil is having support at $98.20-$95.40 and resistance is at $102.50–105.10, In rupee terms crude oil has support at ₹7,550-7,380, and resistance at ₹8,050–8,174,” he added.
May natural gas futures were trading at ₹537.30 on MCX in the initial hour of Wednesday morning against the previous close of ₹544.50, down by 1.32 per cent.
Steel futures up, castor down
On the National Commodities and Derivatives Exchange (NCDEX), May steel long futures were trading at ₹56,010 in the initial hour of Wednesday morning against the previous close of ₹55,360, up by 1.17 per cent.
May castor contracts were trading at ₹7,144 on NCDEX in the initial hour of Wednesday morning against the previous close of ₹7164, down by 0.28 per cent.