Crude oil futures, which declined by nearly 1 per cent on Monday, gained more than $1 a barrel on Tuesday due to growing tensions in West Asia.
At 9.56 am on Tuesday, October Brent oil futures were at $77.30, up by 1.31 per cent, and September crude oil futures on WTI (West Texas Intermediate) were at $74.12, up by 1.62 per cent.
August crude oil futures were trading at ₹6227 on Multi Commodity Exchange (MCX) during the initial hour of trading on Tuesday against the previous close of ₹6146, up by 1.32 per cent, and September futures were trading at ₹6173 against the previous close of ₹6097, up by 1.25 per cent.
In their Commodities Feed, ING Think’s Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, said Brent futures traded to an intraday low of $75.05 a barrel on Monday, although it recovered from these lows, settling just 0.66 per cent lower on the day.
Market continued to see a recovery in early morning trading on Tuesday. They said oil has been unable to escape the broader risk-off move seen across assets, as concerns grow over the potential for a US recession following some weaker macro data in recent weeks. This only adds to worries over Chinese demand.
Investors have been exiting commodities in recent weeks, highlighted in positioning data and this has continued in recent days. ICE data shows that aggregated open interest in ICE Brent has fallen by more than 8 per cent since mid-June. This souring in speculative appetite comes despite oil fundamentals still looking supportive.
They said offsetting some of the macro bearishness were reports that the Sharara oilfield in Libya has fully halted production with reports of protests at the site. The oilfield has a production capacity of 300000 barrels a day, although before the disruption it was producing around 270,000 barrels a day.
The recent developments in West Asia have supported the prices of the commodity. The recent killings of a prominent Hamas leader and Hezbollah commander have increased the tensions in the region as Iran has decided to retaliate these killings.
Meanwhile, the US has taken a decision to increase its military presence in the region to counter any retaliatory moves by Iran and Hamas. All these developments have impacted the talks for a ceasefire between Israel and Hamas.
Market players fear that further escalations in the conflicts in the region could impact crude oil supplies from the region.
August natural gas futures were trading at ₹165.50 on MCX during the initial hour of trading on Tuesday against the previous close of ₹164.40, up by 0.67 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), August castor contracts were trading at ₹6226 in the initial hour of trading on Tuesday against the previous close of ₹6193, up by 0.53 per cent.
August jeera futures were trading at ₹26450 on NCDEX in the initial hour of trading on Tuesday against the previous close of ₹26370, up by 0.30 per cent.