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Crude oil futures traded lower on Tuesday morning after seeing an increase on Monday due to fears of production disruption in Libya.
At 9.57 am on Tuesday, November Brent oil futures were at $80.17, down by 0.24 per cent, and October crude oil futures on WTI (West Texas Intermediate) were at $77.16, down by 0.34 per cent.
September crude oil futures were trading at ₹6485 on Multi Commodity Exchange (MCX) during the initial hour of trading on Tuesday against the previous close of ₹6483, up by 0.03 per cent, and October futures were trading at ₹6396 against the previous close of ₹6399, down by 0.05 per cent.
The decline in crude oil futures is seen as a technical correction, as prices had gained in the previous session over tensions in West Asia, and concerns over a possible halt to oil production in Libya.
In their Commodities Feed, ING Think’s Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, said oil prices broke back above $81 a barrel on Monday, rallying more than 3 per cent. This was after reports that Libyan oil production will be halted due to political fighting.
They said the internationally recognised Tripoli-based government wants to replace the current governor of the central bank.
“However, the unrecognised Eastern Libyan government backs the current governor, and in what appears to be a negotiating tactic has threatened to stop oil production, which is largely based in the east,” they said.
This is important for the oil market as Libya produces between 1.1- 1.2 million barrels a day. They said a prolonged outage will leave the market in a deeper deficit.
Meanwhile, escalation of tensions in West Asia also helped boost the price on Monday. On Sunday, Israel launched a pre-emptive strike against Lebanon. Hezbollah group also launched rocket and drone attacks on Israel. Added to this, there was no breakthrough in ceasefire talks between Israel and Hamas.
September natural gas futures were trading at ₹178.70 on MCX during the initial hour of trading on Tuesday against the previous close of ₹180.40, down by 0.94 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), September cottonseed oilcake contracts were trading at ₹3557 in the initial hour of trading on Tuesday against the previous close of ₹3539, up by 0.51 per cent.
October turmeric (farmer polished) futures were trading at ₹13904 on NCDEX in the initial hour of trading on Tuesday against the previous close of ₹13976, down by 0.52 per cent.
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