Crude oil futures traded higher on Monday morning as the market turned cautious over the outcome of the meeting of the US Federal Reserve later this week.
At 9.55 am on Monday, August Brent oil futures were at $79.90, up by 0.35 per cent, and July crude oil futures on WTI (West Texas Intermediate) were at $75.80, up by 0.36 per cent.
June crude oil futures were trading at ₹6334 on Multi Commodity Exchange (MCX) during initial trading on Monday morning against the previous close of ₹6323, up by 0.17 per cent, and July futures were trading at ₹6331 against the previous close of ₹6321, up by 0.16 per cent.
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Stronger-than-expected
The market is expecting the US Federal Reserve to keep the interest rates steady due to several factors. One among them is the latest non-farm payroll data from the US. According to the US Bureau of Labour Statistics, total non-farm payroll employment increased by 272,000 in May against 165,000 in April. The market was expecting it to be around 182,000 during May.
The US Bureau of Labour Statistics said employment continued to trend up in several industries, led by health care; government; leisure and hospitality; and professional, scientific, and technical services.
Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, said in ING Think’s Commodities Daily that oil prices held up relatively well on Friday considering the stronger-than-expected US jobs report and the resulting strength in the US dollar and US treasury yields.
The data will also likely push back expectations on when the Fed may start cutting rates. However, broader sentiment in the oil market remains bearish. Oil has settled lower for three consecutive weeks and traded down to its lowest since February last week, they said.
ING Think’s Commodities Daily said weaker prices saw the US Department of Energy (DoE) announce a tender on Friday to purchase up to 6 million barrels of crude oil for its strategic petroleum reserve. The DoE announced two tenders, one for 1.5 million barrels for delivery in September, and another for 4.5 million barrels for delivery in October, November and December.
The market is also keenly watching the political developments in Europe following the decision of French President Emmanuel Macron to call for a snap poll in France. His decision to call a snap poll was taken after his Renaissance party lost to Marine Le Pen’s far-right National Rally party in EU elections on Sunday.
In an address to the nation, Macron said lower house elections would be called for June 30, with a second-round vote on July 7.
Jeera, guar gum dip
Meanwhile, a Reuters report, which quoted Iraq’s Oil Minister, Hayan Abdel-Ghani, said there has been progress in talks with Kurdistan officials and representatives of international companies operating there for a deal to resume oil exports via the Iraq-Turkey oil pipeline. This pipeline handled around 0.5 per cent of global oil supply, it said.
June mentha oil futures were trading at ₹913.80 on MCX against the previous close of ₹928, down by 1.53 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), June jeera contracts were trading at ₹28,900 against the previous close of ₹29,370, down by 1.60 per cent.
July guar gum futures were trading at ₹10,540 on NCDEX against the previous close of ₹10568, down by 0.26 per cent.