Crude oil futures traded lower on Monday morning due to new threats of Covid emerging in China and concerns over a global recession.
At 10.05 am on Monday, September Brent oil futures were at $106.46, down by 0.52 per cent, and August crude oil futures on WTI were at $103.97, down by 0.78 per cent.
July crude oil futures were trading at ₹8,246 on Multi Commodity Exchange (MCX) in the initial hour of Monday morning against the previous close of ₹8,314, down by 0.82 per cent, and August futures were trading at ₹8,036 as against the previous close of ₹8,093, down by 0.70 per cent.
Omicron subvariant
Market analysts said the discovery of a new sub-variant of Omicron in Shanghai, China, has created fears about a Covid-related lockdown in some parts of China. Since China is a major consumer of crude oil, any lockdown will bring down the demand for the commodity.
Another factor affecting crude oil demand is the likelihood of a global recession. Many economies have increased interest rates to fight inflation. Market analysts believe that such a move could destroy the commodity demand, leading to recession in those countries.
Reports said US President Joe Biden would be visiting Saudi Arabia this week. His visit is intended at taming the energy prices that are affecting major economies in the world.
In his outlook for the day, Saish Sandeep Sawant Dessai, Research Associate, Base Metals, Angel One Ltd, said given the expectations of a 75 basis points rate hike by the US Fed and the rising inflation will have an effect on the demand. However, with supply concerns returning to the fore, the downside would likely remain capped, he said.
July natural gas futures were trading at ₹502.90 on MCX in the initial hour of Monday morning against the previous close of ₹483.10, up by 4.10 per cent.
Dhaniya, guar gum rise
On the National Commodities and Derivatives Exchange (NCDEX), July guar gum futures were trading at ₹9,783 in the initial hour of Monday morning against the previous close of ₹9,639, up by 1.49 per cent.
July dhaniya contracts were trading at ₹12,142 on NCDEX against the previous close of ₹12,044, up by 0.81 per cent.