Crude oil futures traded higher on Thursday morning following concerns over potential disruptions in supplies due to the escalation of conflict in West Asia.
At 9.55 am on Thursday, December Brent oil futures were at $74.75, up by 1.15 per cent, and November crude oil futures on WTI (West Texas Intermediate) were at $71.02, up by 1.31 per cent.
October crude oil futures were trading at ₹5972 on Multi Commodity Exchange (MCX) during the initial hour of trading on Thursday against the previous close of ₹5935, up by 0.62 per cent, and November futures were trading at ₹5951 against the previous close of ₹5911, up by 0.68 per cent.
The ongoing conflict in the West Asia region entered a new phase with Iran launching more than 180 ballistic missiles on Israel on Tuesday.
On Thursday, Israel conducted a strike on Beirut’s Bachoura neighbourhood. A statement by the Labanese health ministry said this killed two people and injured 11.
Participation of Iran in the ongoing conflict in West Asia has led to apprehensions in the market over possible crude oil supply disruptions.
In ING Think’s Commodities Daily, Warren Patterson, Head of Commodities Strategy, said oil prices continued their move higher on Wednesday amid the uncertainty over how Israel would respond to Iran’s missile attack. At one stage on Thursday, ICE Brent was up as much as 3.5 per cent and broke above $76 a barrel. However, the market was unable to hold onto all of these gains, finishing the day less than 0.5 per cent higher. “The fizzling out of the rally is somewhat surprising, given the increased risk facing the oil market,” he said.
There have been suggestions that Israel could target Iranian oil facilities, which would have the potential to push oil prices significantly higher depending on the scale of the attack. Iran exports roughly 1.7 million barrels a day of crude oil, so the potential impact is meaningful.
He said an attack on oil facilities may upset the US, particularly as it moves closer to elections. A more limited response would be hitting launch sites used for the recent missile attack, while a significant escalation would be if Israel decided to target Iranian nuclear facilities, he added.
However, the weekly oil petroleum status report by the US EIA (Energy Information Administration) limited further gains in the price of crude oil.
According to EIA, US commercial crude oil inventories increased by 3.9 million barrels for the week ending September 27, from the previous week. At 416.9 million barrels, US crude oil inventories were about 4 per cent below the five-year average for this time of year. Total motor gasoline inventories increased by 1.1 million barrels from last week and were about 1per cent below the five-year average for this time of year.
Total products supplied in the US over the last four-week period averaged 20.1 million barrels a day, down by 1 per cent from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 8.7 million barrels a day, up by 4.9 per cent from the same period last year. US crude oil imports averaged 6.6 million barrels a day last week, an increase of 171,000 barrels a day from the previous week.
October aluminium futures were trading at ₹243.05 on MCX during the initial hour of trading on Thursday against the previous close of ₹239.65, up by 1.42 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), October turmeric (farmer polished) contracts were trading at ₹13690 in the initial hour of trading on Thursday against the previous close of ₹13894, down by 1.47 per cent.
October jeera futures were trading at ₹26155 on NCDEX in the initial hour of trading on Thursday against the previous close of ₹26335, down by 0.68 per cent.