Crude oil futures rose on Monday morning after the OPEC+ (Organization of the Petroleum Exporting Countries and its allies) decided to delay production output increase by a month.
At 9.54 am on Monday, January Brent oil futures were at $74.31, up by 1.66 per cent, and December crude oil futures on WTI (West Texas Intermediate) were at $70.72, up by 1.77 per cent.
November crude oil futures were trading at ₹5,955 on Multi Commodity Exchange (MCX) during the initial hour of trading on Monday against the previous close of ₹5,988, down by 0.55 per cent, and December futures were trading at ₹5,933 against the previous close of ₹5,966; down by 0.55 per cent.
A press release by OPEC secretariate said on Sunday that the eight OPEC+ countries Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman -- which previously announced additional voluntary adjustments in April and November 2023 -- have agreed to extend the November 2023 voluntary production adjustments of 2.2 million barrels a day for one month until the end of December 2024.
In their Commodities Daily feed, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said the oil prices traded stronger on Monday morning after a handful of OPEC+ members decided to delay a supply increase by one month. Members were set to gradually unwind their additional voluntary supply cuts of 2.2 million barrels a day from 1 December, translating to a monthly supply increase of around 1,80,000 barrels a day for 12 months.
“While the delay until January does not change fundamentals significantly, it does potentially leave the market having to rethink the strategy of OPEC+. There had been reports in recent weeks that Saudi Arabia was unhappy about giving away market share and also not pleased by the lack of compliance by some OPEC+ members. This led to suggestions that the group would likely go ahead with supply increases despite the recent weakness in prices. This was also a view that we held,” they said.
This delayed supply increase means that maybe the group is more willing to support prices than many believe, they said, adding: “Our balance continues to show that the market will be in surplus through 2025 unless OPEC+ continues with cuts through next year.”
Increase in tensions in West Asia also boosted the price of the commodity. Iran’s leader Ayatollah Ali Khamenei said a crushing response would be given to Israel. The latest developments in West Asia have created apprehensions in the market over possible crude oil supply disruptions from the region. Iran is a major producer of crude oil.
Market is also keenly waiting for the outcome of the Presidential election in the US. The recent polls indicate that both Donal Trump and Kamala Harris are in a tight race. Both candidates have promised to increase domestic oil production if they come to power.
November natural gas futures were trading at ₹218.70 on MCX during the initial hour of trading on Monday against the previous close of ₹226.50, down by 3.44 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), December turmeric (farmer polished) contracts were trading at ₹12,636 in the initial hour of trading on Monday against the previous close of ₹12,796; down by 1.25 per cent.
November jeera futures were trading at ₹23,600 on NCDEX in the initial hour of trading on Monday against the previous close of ₹24,015 down by 1.73 per cent.