Crude oil futures traded lower on exchanges in early trade as China continued with lockdown in Shanghai, affecting the demand prospects from a major consumer. Added to this, the expected move by the US Fed Reserve to hike interest rates affected the price movements.

At 10.10 am, the June Brent oil futures were at $103.55, down by 2.90 per cent; and June crude oil futures on WTI were at $98.99, down by 3.02 per cent.

May crude oil futures were trading at ₹7,623 on Multi Commodity Exchange (MCX) in the early deals against the previous close of ₹7,824, down by 2.57 per cent; and June futures were trading at ₹7,578 against the previous close of ₹7,777, down by 2.56 per cent.

According to a Bloomberg report, China’s demand for gasoline, diesel and aviation fuel is expected to fall by 20 per cent year-on-year in April. It said that that is equivalent to a drop in crude oil consumption of 1.2 million barrels a day.

The markets had noted the Shanghai authorities erecting fences outside residential buildings to control the Covid outbreak foring 25 million people to remain indoor in the region.

0.5 point hike on table

Added to this, the US Federal Reserve Chairman Jerome Powell has indicated that a half-point interest rate increase ‘will be on the table’ when the Fed meets in May.

In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said crude oil lost nearly 5 per cent last week on demand concerns.

Oil prices extended losses on Monday amid persistent worries that prolonged Covid lockdowns in Shanghai and potential US rate hikes would dent global economic growth and demand for fuel. Natural gas fell hastened by a larger-than-expected weekly storage build, he said.

However, banning Russian oil by European Union and decline in crude oil inventories in the US supported oil prices at lower levels. IMF revised down global growth due to Russia-Ukraine crisis and Federal Reserve Chairman also gave signal for aggressive rate hikes last week.

He said the dollar index crossed two-year highs and hit 101 mark. Strength in the dollar also pushed oil prices lower.

“We expect crude oil prices may show some more pressure in today’s session. Crude oil is having support at $97.20-$95.40 and resistance is at $103.10–105.00, In rupee terms, crude oil has support at ₹7,650-7,520, while resistance at ₹7,920–8,050,” he said.

May natural gas futures were trading at ₹504.50 on MCX in the initial hour of Monday morning against the previous close of ₹520.40, down by 3.06 per cent.

NCDEX

On the National Commodities and Derivatives Exchange (NCDEX), May dhaniya futures were trading at ₹12,670 in the initial hour of Monday morning against the previous close of ₹12,480, up by 1.52 per cent.

May cottonseed oilcake contracts were trading at ₹2,827 on NCDEX in the initial hour of Monday morning against the previous close of ₹2,883, down by 1.94 per cent.

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