Crude oil futures higher on Monday morning as leaders in the US government reached a tentative deal on US debt ceiling.
At 9.54 am on Monday, August Brent oil futures were at $77.55, up by 0.74 per cent, and July crude oil futures on WTI were at $73.28, up by 0.84 per cent.
June crude oil futures were trading at ₹6,064 on the Multi Commodity Exchange (MCX) during initial trading against the previous close of ₹6,004, up by 1 per cent, and July futures were trading at ₹6,086 as against the previous close of ₹6,030, up by 0.93 per cent.
Impact on economy
On Saturday, US President Joe Biden and Republican House Speaker Kevin McCarthy finalised a deal that agreed in principle to suspend the $31.4 trillion government debt ceiling for the next two years. The deal also focussed on capping government spending for the next two years.
These leaders hoped that the members of both Democratic and Republican parties will support this deal to avert a debt default in the US.
A failure to reach an agreement would have led to a debt default in the US. This would have impacted the US economy. Any impact on the economy would have impacted the demand for commodities such as crude oil.
OPEC+ June 4 meet
The market is now waiting for the meeting of OPEC (Organisation of the Petroleum Exporting Countries) and its allies, known as OPEC+, in Vienna on June 4, for the future direction on the production output of its members. Last week, two OPEC+ members – Russia and Saudi Arabia – came out with contradicting statements on production cuts.
Deputy Prime Minister of Russia, Alexander Novak, stated that OPEC+ is unlikely to announce new steps on oil production output cut at its Vienna meeting on June 4, due to factors, such as the high-interest rates in the US and a slow economic recovery in China.
On the other hand, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman warned short sellers to ‘watch out’ for potential consequences in the coming days. His statement was seen as a hint towards a further production cut by OPEC+ in the coming days.
In April, OPEC+ had announced a surprise production cut to control the fall in the price of crude oil in the global markets.
Cottonseed oil cake gains, castorseed dips
June natural gas futures were trading at ₹201.20 on MCX against the previous close of ₹199.30, up by 0.95 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), June cottonseed oilcake contracts were trading at ₹2,542 against the previous close of ₹2,491, up by 2.05 per cent.
June castorseed futures were trading at ₹5,510 on NCDEX in the initial trading hour of Monday morning against the previous close of ₹5,577, down by 1.20 per cent.