Crude oil futures traded higher on Friday morning as Saudi Arabia (a major producer) is all set to reduce its crude oil output by 1 million barrels a day from Saturday. Added to this, there was a huge decline in crude oil inventories in the US (a major consumer). However, a weaker-than-expected economic recovery in China, which is a major consumer of crude oil, checked the increase in price of futures.
At 9.54 am on Friday, September Brent oil futures were at $74.64, up by 0.17 per cent, and August crude oil futures on WTI (West Texas Intermediate) were at $69.89, up by 0.04 per cent.
July crude oil futures were trading at ₹5,752 on the Multi Commodity Exchange (MCX) during initial trading against the previous close of ₹5,738, up by 0.24 per cent, and August futures were trading at ₹5,785 against the previous close of ₹5770, up by 0.26 per cent.
US supplies up 1.3 per cent
As announced earlier in a meeting of the Organization of Petroleum Exporting Countries and its allies, known as OPEC+, Saudi Arabia will cut its crude oil output by 1 million barrels a day from July 1.
Added to this, official data from the US EIA (Energy Information Administration) for the week ending June 23 showed a huge decline in inventories in that country. US commercial crude oil inventories (excluding those in the strategic petroleum reserve) decreased by 9.6 million barrels from the previous week. At 453.7 million barrels, US crude oil inventories were approximately 1 per cent below the five-year average for this time of year.
Total products supplied over the last four-week period averaged 20.2 million barrels a day, up by 1.3 per cent from the same period last year. Over the past four weeks, the motor gasoline product supplied averaged 9.3 million barrels a day, up by 3.8 per cent from the same period last year.
US crude oil imports averaged 6.6 million barrels a day last week, an increase of 4,18,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6.4 million barrels a day, 0.6 per cent more than the same four-week period last year.
Meanwhile, strong growth in US GDP led the market to think that this may help the Fed Reserve increase interest rates further. Any increase in interest rates will impact the price of commodities such as crude oil in the market.
In spite of these developments, a lesser-than-expected economic recovery in China, which is another major consumer of crude oil, worried the markets. Both the manufacturing and service sectors grew less than market expectations in June.
Turmeric, guar gum gleam
As some global agencies expect China to boost oil demand during 2023, the lesser-than-expected economic recovery has created apprehensions in the market over demand prospects for the commodity.
July natural gas futures were trading at ₹221.40 on MCX against the previous close of ₹224.30, down by 1.29 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), July guar gum contracts were trading at ₹10,580 in the initial trading hour of Friday morning, against the previous close of ₹10,422, up by 1.52 per cent.
August turmeric (farmer polished) futures were trading at ₹9,698 on NCDEX in the initial trading hour of Friday morning, against the previous close of ₹9,518, up by 1.89 per cent.