Crude oil futures traded lower on Friday morning as the data showed a shrinking of manufacturing activities in China during May.
At 9.53 am on Friday, August Brent oil futures were at $81.69, down by 0.23 per cent, and July crude oil futures on WTI (West Texas Intermediate) were at $77.64, down by 0.35 per cent.
June crude oil futures were trading at ₹6,477 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Friday morning against the previous close of ₹6,488, down by 0.17 per cent, and July futures were trading at ₹6,472, against the previous close of ₹6,480, down by 0.12 per cent.
Data released by the National Bureau of Statistics of China showed that the purchasing managers’ index (PMI) declined to 49.5 in May from 50.4 in April. The market was expecting it to be at 50.5 for May. During May, both new orders and foreign sales witnessed a decline.
China’s non-manufacturing PMI declined to 51.1 in May from 51.2 in April. Market was expecting it to be 51.5.
This data showed that business activities in China are cooling after witnessing a growth in March and April. This created apprehensions in the market over the demand for commodities such as crude oil. China is one of the major consumers of crude oil in the global market.
Meanwhile, the official data by the US EIA (Energy Information Administration) showed a decline in crude oil inventories and an increase in gasoline inventories in that country.
According to US EIA, commercial crude oil inventories decreased by 4.2 million barrels for the week ending May 24, against an increase of 1.82 million barrels in the previous week. The market was expecting it to decline by 1.6 million barrels for the week ending May 24.
At 454.7 million barrels, US crude oil inventories were about 4 per cent below the five-year average for this time of the year.
Total motor gasoline inventories increased by 2 million barrels for the week ending May 24, against a decline of 0.94 barrels in the previous week. Total motor gasoline inventories were about 1 per cent below the five-year average for this time of year.
Total products supplied in the US over the last four-week period averaged 19.9 million barrels a day, down by 0.1 per cent from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9 million barrels a day, down by 1.7 per cent from the same period last year.
Available data showed that the US economy grew at 1.3 per cent in the first quarter. The market was expecting 1.6 per cent growth during the quarter.
The President of the Dallas Federal Reserve, Lorie Logan, said she is still worried about upside risks to inflation despite a recent easing. Quoting Logan, a Reuters report said: “It’s really important that we don’t lock into any particular path for monetary policy. I think it’s too soon to really be thinking about rate cuts.”
Market feels that any decision to delay interest rate cuts would impact the price of commodities such as crude oil.
June natural gas futures were trading at ₹212.90 on MCX during the initial hour of trading on Friday morning, against the previous close of ₹217, down by 1.89 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), June cottonseed oilcake contracts were trading at ₹2,747 in the initial hour of trading on Friday morning, against the previous close of ₹2,759, down by 0.43 per cent.
June jeera futures were trading at ₹28,270 on NCDEX in the initial hour of trading on Friday morning, against the previous close of ₹28,475, down by 0.72 per cent.