Crude oil futures up as US inventory declines

Crude oil futures traded higher on Thursday morning as there was decline in the inventory level in the US for the week ending June 12.

At 10 am on Thursday, September Brent oil futures were at $85.46, up by 0.45 per cent, and September crude oil futures on WTI (West Texas Intermediate) were at $81.95, up by 0.63 per cent.

July crude oil futures were trading at ₹6970 on Multi Commodity Exchange (MCX) during the initial hour of trading on Thursday against the previous close of ₹6911, up by 0.85 per cent, and August futures were trading at ₹6860 against the previous close of ₹6809, up by 0.75 per cent.

According to the US EIA (Energy Information Administration), commercial crude oil inventories in the US decreased by 4.9 million barrels for the week ending July 12 from the previous week. At 440.2 million barrels, US crude oil inventories were about 5 per cent below the five-year average for this time of year.

Market was expecting the decline to be around 0.90 million barrels for the week ending July 12. However, there was a decline in crude oil inventories to the tune of 3.44 million barrels in the previous week.

Total motor gasoline inventories increased by 3.3 million barrels from last week and were slightly above the five-year average for this time of year.

Total products supplied in the US over the last four-week period averaged 20.5 million barrels a day, up by 1.2 per cent from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9.1 million barrels a day, up by 0.2 per cent from the same period last year.

US crude oil imports averaged 7 million barrels a day last week, an increase of 277,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6.7 million barrels a day, 1.1 per cent more than the same four-week period last year.

Crude oil prices also got a boost following the statements of some US Federal Reserve officials.

Speaking at the Kansas City Fed on Wednesday, Federal Reserve Governor Christopher Waller said: “I believe current data are consistent with achieving a ‘soft landing,’ and I will be looking for data over the next couple months to buttress this view. While I don’t believe we have reached our final destination, I do believe we are getting closer to the time when a cut in the policy rate is warranted.”

Quoting an interview of New York Fed President John Williams to Wall Street Journal, a Reuters report said: “We’re actually going to learn a lot between July and September. We’ll get two months of inflation data. I feel like the past three months - and I would include in June, based on what we’ve seen - seems to be getting us closer to a disinflationary trend that we’re looking for. I would like to see more data to gain further confidence inflation is moving sustainably towards our 2 per cent goal. We’ve got a few good months now.”

These statements have made the market participants to expect interest rate cut in September. Reduction in interest rate will help boost consumption of commodities such as crude oil, creating more demand for it. This will help boost the price of the commodity.

July menthaoil futures were trading at ₹953 on MCX during the initial hour of trading on Thursday against the previous close of ₹946.40, up by 0.70 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), August jeera contracts were trading at ₹26960 in the initial hour of trading on Thursday against the previous close of ₹26675, up by 1.07 per cent.

August cottonseed oilcake futures were trading at ₹2980 on NCDEX in the initial hour of trading on Thursday against the previous close of ₹3010, down by 1 per cent.