Crude oil futures traded higher on Tuesday morning following Russia’s decision to limit the supply of gas to Germany through Nord Steam 1 pipeline to 20 per cent of the capacity. A cut in gas supplies will lead to the increase in the consumption of crude oil.
At 10.01 am on Tuesday, September Brent oil futures were at $106.71, up by 3.40 per cent, and September crude oil futures on WTI were at $98.13, up by 1.48 per cent.
August crude oil futures were trading at ₹7,841 on Multi Commodity Exchange (MCX) in the initial hour of Tuesday morning against the previous close of ₹7,713, up by 1.66 per cent; and September futures were trading at ₹7,695 as against the previous close of ₹7,555, up by 1.85 per cent.
On-and-off cuts
Russia had cut gas supplies to Germany through Nord Stream 1 to 40 per cent of capacity in June. Then it had cited the delayed return of a turbine that was being serviced by Siemens Energy in Canada.
In July, Russia shut Nord Stream 1 for annual maintenance for 10 days. However, Russia restarted Nord Steam 1 last Thursday at 40 per cent of its normal levels.
Now Russia’s Gazprom has said gas supplies to Germany through the Nord Stream 1 pipeline would be reduced to 20 per cent of capacity. This move will impact Europe as it will not be able to meet gas storage demand for the winter season. This will lead them to shift to crude oil to meet the requirements.
With a capacity of 55 billion cubic metres a year, Nord Stream 1 is the single biggest gas link to Europe from Russia. Russia exports around 40 per cent of gas and 30 per cent of crude oil to Europe.
August natural gas futures were trading at ₹691.20 on MCX in the initial hour of Tuesday morning against the previous close of ₹680.30, up by 1.60 per cent.
Guar gum up, dhaniya down
On the National Commodities and Derivatives Exchange (NCDEX), August guar gum futures were trading at ₹9,314 in the initial hour of Tuesday morning against the previous close of ₹9,292, up by 0.24 per cent.
August dhaniya contracts were trading at ₹11,680 against the previous close of ₹11,784, down by 0.88 per cent.