Crude oil futures traded lower by more than 2 per cent on Monday morning following reports of unrest in China over Covid control measures imposed in that country. Brent crude oil futures fell to $81.16 earlier in the session, its lowest since January 11, 2022.
At 10.01 am on Monday, January Brent oil futures were at $81.26, down 2.83 per cent, and January crude oil futures on WTI were at $74.08, down by 2.88 per cent.
December crude oil futures were trading at ₹6,106 on the Multi Commodity Exchange (MCX) in the initial trading hour of Monday morning, against the previous close of ₹6,311, down by 3.25 per cent; and January futures were trading at ₹6,160, as against the previous close of ₹6,359, down by 3.13 per cent.
According to reports, China recorded 40,052 new Covid cases on Monday, against 39,506 on Sunday. The rise in the number of cases and the measures imposed to control the spread of the disease have led to unrest in China.
Reports highlighted week-end protests in China over Covid-related restrictions. Such protests have not been seen in China since Xi Jinping took charge as President a decade ago.
These developments have hurt investor sentiment and clouded the demand outlook. China is a major consumer of crude oil, and any impact on its economy would have an impact on demand in the global market.
Reports of the US granting a licence to Chevron Corp to resume oil production in Venezuela also put pressure on prices.
The market is awaiting the outcome of the meeting of OPEC (Organisation of Petroleum Exporting Countries) and its allies, known as OPEC+, which is scheduled for December 4. It remains to be seen whether OPEC+ resorts to further production cuts to check a further fall in prices.
December natural gas futures were trading at ₹594.90 on the MCX in the initial trading hour of Monday morning, against the previous close of ₹605.40, down by 1.73 per cent.
NCDEX
On the National Commodities and Derivatives Exchange (NCDEX), December steel long contracts were trading at ₹43,600 in the initial trading hour of Monday morning, against the previous close of ₹43,420, up by 0.41 per cent.
December cottonseed oilcake futures were trading at ₹2824 on the NCDEX in the initial trading hour of Monday morning, against the previous close of ₹2863, down by 1.36 per cent.