Crude oil futures traded lower on Tuesday morning, despite increase in attacks on merchant vessels in Red Sea, and reduction in five-year loan prime rate in China.
At 9.53 am on Tuesday, April Brent oil futures were at $83.46, down by 0.12 per cent, and April crude oil futures on WTI (West Texas Intermediate) were at $78.36, up by 0.18 per cent.
March crude oil futures were trading at ₹6,509 on Multi Commodity Exchange (MCX) in early trading against the previous close of ₹6,518, down by 0.14 per cent; and April futures were trading at ₹6,512 as against the previous close of ₹6519, down by 0.11 per cent.
Rise in tourism revenue
Market reports said four more merchant vessels faced drone and missile attacks from the Houthis in the Red Sea since Friday. Quoting Houthis, a Reuters report said the Belize-flagged, British-registered and Lebanese-managed Rubymar cargo vessel in the Gulf of Aden was in danger of sinking due to the attacks. Many commodities, including crude oil, that use the Red Sea for transportation of cargo are affected by the frequent attacks on merchant vessels in the route.
Meanwhile, the People’s Bank of China has reduced the five-year loan prime rate by 25 basis points to 3.95 per cent. The market was expecting a rate cut of around 15 basis points. Loan prime rate is the reference for mortgages in China. This move of the Chinese central bank is seen as an effort to boost credit demand for properties in China.
Another factor that attracted the attention of the market was increase in tourism revenue in China during Lunar New Year holidays. Market reports said tourism revenues increased by 47.3 per cent during Lunar New Year holidays of 2024 compared to 2023’s Lunar New Year holidays. The revenues were above the pre-Covid revenues in 2019.
Cottonseed oilcake, kapas decline
China is one of the major consumers of crude oil in the global market, and the above two developments could help boost the demand for the commodity in that market.
February zinc futures were trading at ₹214.60 on MCX against the previous close of ₹215.75, down by 0.53 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), March cottonseed oilcake contracts were trading at ₹2,604 against the previous close of ₹2,622, down by 0.69 per cent.
April kapas futures were trading at ₹1,563 on NCDEX against the previous close of ₹1577, down by 0.92 per cent.