Crude oil futures traded higher on Monday morning as China’s Central bank reduced the one-year loan prime rate by 10 basis points to 3.45 per cent. Supply tightness in the physical market also helped boost the price of the commodity.

At 9.55 am on Monday, October Brent oil futures were at $85.36, up by 0.66 per cent, and October crude oil futures on WTI (West Texas Intermediate) were at $81.22, up by 0.69 per cent.

August crude oil futures were trading at ₹6,805 on the Multi Commodity Exchange (MCX) during initial trading against the previous close of ₹6,772, up by 0.49 per cent, and September futures were trading at ₹6,754, as against the previous close of ₹6,726, up by 0.42 per cent.

5-year loan rate intact

On Monday, China’s central bank reduced the one-year loan prime rate from 3.55 per cent to 3.45 per cent. However, it kept the five-year loan prime rate at 4.20 per cent. According to market reports, new and outstanding loans in China are based on the one-year loan prime rate. The five-year loan prime rate is used to determine the mortgage cost in that country.

However, the market was not happy with the rate cut as it expected the one-year loan prime rate cut to be at 15 basis points.

Some in the market see the rate cuts as a move to boost the economy, which is struggling to recover. Economic recovery in that country will help boost the demand for commodities such as crude oil.

Meanwhile, tightness in the physical market due to the production output cuts by major producers such as Saudi Arabia and Russia also helped boost the price of crude oil in the global markets.

Added to this, the recent weekly petroleum status report by the US EIA (Energy Information Administration) showed a huge decline in crude oil inventories in the US.

Turmeric, mentha oil sizzle

However, factors such as the uncertain economic outlook in China and the US Federal Reserve’s indication to increase interest rates to control inflation in that country limited a further increase in the price of the commodity.

August mentha-oil futures were trading at ₹991.50 on MCX, against the previous close of ₹951.60, up by 4.19 per cent.

On NCDEX, guar gum October contracts dropped ₹138 to ₹13,150 a quintal. Turmeric December contracts were back above ₹18,000 at ₹18,048, up ₹656 a quintal.

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