Crude oil futures traded lower on Friday morning despite strong economic data from the US.
At 9.55 am on Friday, October Brent oil futures were at $83.31, down by 0.57 per cent; and September crude oil futures on WTI (West Texas Intermediate) were at $79.68, down by 0.51 per cent.
August crude oil futures were trading at ₹6,558 on Multi Commodity Exchange (MCX) in the initial trading against the previous close of ₹6,562, down by 0.06 per cent; and September futures were trading at ₹6,540 as against the previous close of ₹6,547, down by 0.11 per cent.
The second quarter US GDP grew by 2.4 per cent, which was more than the market expectations. Market was expecting it to grow by 1.8 per cent during Q2. A strong GDP data allayed the fears of a recession in the US during this year. This boosted the market sentiments on Thursday.
A strong GDP data also strengthened the dollar against some major currencies on Thursday. A strong dollar makes commodities such as crude oil pricier impacting the demand for the commodity.
Added to this, many in the market feel that there could be a possibility of one more interest rate increase by the US Federal Reserve in the coming months. The Fed had increased the interest rates by 25 basis points this week keeping the options open for more hikes in the coming months.
Demand growth from China
However, the signals of tighter crude oil supplies in the coming months and an expected demand growth from China supported the crude oil prices.
Two of the major oil producers – Saudi Arabia and Russia – have already decided to bring down their production output in August. Market players are of the opinion that these nations may extend this output cut to September also. Such signals of supply tightness in the coming months are boosting the price of commodities such as crude oil.
In addition to this, the proposed stimulus measures by the Chinese government to boost economy of that nation will also boost demand for crude oil. China is one of the major buyers of crude oil in the world market.
Natural gas rises, turmeric contracts
August natural gas futures were trading at ₹215.50 on MCX against the previous close of ₹212.20, up by 1.56 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), August turmeric (farmer polished) contracts were trading at ₹14,680 against the previous close of ₹13,936, up by 5.34 per cent.
August dhaniya futures were trading at ₹7,648 on NCDEX against the previous close of ₹7,446, up by 2.71 per cent.