Crude oil futures traded higher on Friday morning as Saudi Arabia and Russia announced that they can pause or reverse voluntary production increases if they find market is not strong enough.

At 9.53 am on Friday, August Brent oil futures were at $80.03, up by 0.20 per cent, and July crude oil futures on WTI (West Texas Intermediate) were at $75.75, up by 0.26 per cent.

June crude oil futures were trading at ₹6327 on Multi Commodity Exchange (MCX) during initial trading on Friday morning against the previous close of ₹6326, up by 0.02 per cent, and July futures were trading at ₹6323 against the previous close of ₹6322, up by 0.02 per cent.

Phase out move

Participating in an event in Russia, Prince Abdulaziz bin Salman, Saudi Arabia’s Energy Minister, said Organization of the Petroleum Exporting Countries and allies, known as OPEC+, can pause or reverse voluntary output increases if it decides the market is not strong enough.

The Deputy Prime Minister of Russia, Alexander Novak, who participated in that event, said: “We are ready to react quickly to market uncertainties.”

On Sunday, OPEC+ had announced a production output cut of around 5.8 million barrels a day till 2025. This cut included 3.66 million barrels a day of voluntary cuts that were set to expire at the end of 2024. Another round of around 2.2 million barrels a day cuts till September-end were part of this announcement.

Though the OPEC+ decided to maintain the production output cut of 3.6 million barrels a day till the end of 2024, it announced its decision to phase out the 2.2 million barrels a day cut between October 2024 and September 2025.

This decision had pushed the crude oil prices to four-month lows as the market feared an oversupply from higher production.

However, OPEC+ media statement on Sunday had also clarified that the monthly increase can be paused or reversed subject to market conditions.

EU rate cut

Meanwhile, China’s trade surplus witnessed a growth in May. According to General Administration of Customs of China, trade surplus of that country increased to $82.62 billion in May 2024 from $65.55 billion in May 2023. Market was expecting a trade surplus of $73 billion for May 2024.

Exports grew much more than imports in May. Exports advanced by 7.6 per cent, beating forecasts of a 6 per cent growth, and imports increased by 1.8 per cent, below the market expectations of a 4.2 per cent increase. The trade surplus with the US increased to $30.8 billion in May from $27.2 billion in April. China is a major consumer of crude oil in the global market.

The European Central Bank announced interest rate cut on Thursday. This is the first rate cut in five years since 2019. Market is now awaiting the outcome of the meeting of the US Federal Reserve next week, as any reduction in interest rate in that country will help boost the demand for commodities such as crude oil.

Jeera dips, castorseed up

June mentha oil futures were trading at ₹927.90 on MCX against the previous close of ₹916, up by 1.30 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), July jeera contracts were trading at ₹29,325 against the previous close of ₹29,610, down by 0.96 per cent.

July castorseed futures were trading at ₹5790 on NCDEX against the previous close of ₹5781, up by 0.16 per cent.

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