Brent crude oil and MCX futures traded higher on Tuesday morning, though the market mood was overshadowed by the Chief Economists’ Outlook report released at the World Economic Forum (WEF) in Davos. WTI crude oil, however, was down a tad.
At 10.03 am on Tuesday, March Brent oil futures were at $84.71, up by 0.30 per cent, and March crude oil futures on WTI were at $79.62, down by 0.61 per cent.
January crude oil futures were trading at ₹6,489 on Multi Commodity Exchange (MCX) in the initial trading hour of Tuesday morning against the previous close of ₹6,455, up by 0.53 per cent, and February futures were trading at ₹6,532 against the previous close of ₹6,498, up by 0.52 per cent.
Difficult trade-offs
WEF’s Chief Economists’ Outlook report said though there were some grounds for optimism, such as easing inflationary pressures, many aspects remain gloomy. Policymakers continue to confront an array of difficult trade-offs, while households and businesses will need to adapt to persistent headwinds throughout 2023.
It said that almost two-thirds of respondents in the survey consider a global recession likely in 2023, with 18 per cent considering it extremely likely, more than twice as many as in the previous survey in September 2022.
However, views are divergent, with a third of respondents considering a global recession unlikely this year. Regionally, the situation in Europe and the US is stark, with 100 per cent of chief economists expecting weak or very weak growth for 2023 in the former and 91 per cent in the latter.
The US and Europe are major consumers of crude oil and the crude oil market is naturally worried.
The Chief Economists’ Outlook report said oil prices have fallen to pre-war levels, but the same is not true of global gas prices, which in November 2022 were 321 per cent higher than in two previous years.
The expectation that the energy crisis will be less severe by the end of 2023 reflects the current stress-testing and improvement of systems and processes, diversification of energy sources, improved energy efficiency, and changing patterns of consumption.
Jeera cools
January natural gas futures were trading at ₹306.20 on MCX in the initial trading hour of Tuesday morning against the previous close of ₹299.60, up by 2.20 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), January cottonseed oilcake contracts were trading at ₹3,120 in the initial trading hour of Tuesday morning against the previous close of ₹3,065, up by 1.79 per cent.
March jeera futures were trading at ₹34,790 on NCDEX in the initial trading hour of Tuesday morning against the previous close of ₹35,865, down by 3 per cent.