Crude oil down despite decline in US inventories

Crude oil futures traded lower on Thursday morning despite the official data showing decrease in inventories in the US for the week ending August 16.

At 9.56 am on Thursday, October Brent oil futures were at $76, down by 0.07 per cent, and October crude oil futures on WTI (West Texas Intermediate) were at $71.78, down by 0.21 per cent.

September crude oil futures were trading at ₹6,044 on Multi Commodity Exchange (MCX) during the initial hour of trading on Thursday against the previous close of ₹6,030, up by 0.23 per cent, and October futures were trading at ₹6,029 against the previous close of ₹6,010, up by 0.32 per cent.

• Also read: Crude Check: Outlook is uncertain

According to the US EIA (Energy Information Administration), US commercial crude oil inventories decreased by 4.6 million barrels for the week ending August 16 from the previous week. At 426 million barrels, US crude oil inventories were about 5 per cent below the five-year average for this time of year. Market was expecting the inventories to decline by 2 million barrels during the period.

Total motor gasoline inventories decreased by 1.6 million barrels from last week and were about 3 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 20.4 million barrels a day, down by 2.3 per cent from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, up by 1.5 per cent from the same period last year.

In their Commodities Feed, ING Think’s Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, said that oil closed lower for a fourth consecutive day on Wednesday. ICE Brent settled almost 1.5 per cent lower on Wednesday, leaving it to close just above $76 a barrel - the weakest settlement since January. This weakness comes despite ceasefire talks between Israel and Hamas appearing to have stalled, while the EIA also published a fairly constructive weekly US inventory report.

“Worries over weaker demand continue to be the main driver for the market at the moment. The downward pressure on prices makes it increasingly likely that OPEC+ will have to scrap their plans for gradually increasing supply from October. Failing to do so, will likely put further pressure on prices,” they said.

On the situation in US labour market, Trading Economics portal said that the Bureau of Labour Statistics’ recent revision showed that US job growth for the year ending in March 2024 was weaker than initially reported, with 818,000 fewer jobs added. This significant downward adjustment suggests that the job market was cooling more rapidly than previously believed, averaging about 68,000 fewer jobs per month. In early August, the Bureau of Labour Statistics reported that the US economy added 114,000 jobs in July 2024, well below a downwardly revised 179,000 in June and forecasts of 175,000, it said.

September natural gas futures were trading at ₹195.60 on MCX during the initial hour of trading on Thursday against the previous close of ₹193.40, up by 1.14 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), September guargum contracts re trading at ₹10,170 in the initial hour of trading on Thursday against the previous close of ₹10,142, up by 0.28 per cent.

September cottonseed oilcake futures were trading at ₹3,283 on NCDEX in the initial hour of trading on Thursday against the previous close of ₹3,287, down by 0.12 per cent.