Crude oil up as OPEC likely to extend output cuts

Crude oil futures traded higher on Friday morning as market reports indicated that OPEC+ (Organization of Petroleum Exporting Countries and allies) may continue with production output cuts beyond June also.

At 9.52 am on Friday, July Brent oil futures were at $83.95, up by 0.33 per cent, and June crude oil futures on WTI (West Texas Intermediate) were at $79.22, up by 0.34 per cent.

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May crude oil futures were trading at ₹6616 on Multi Commodity Exchange (MCX) during initial trading on Friday morning against the previous close of ₹6601, up by 0.23 per cent, and June futures were trading at ₹6601 against the previous close of ₹6576, up by 0.38 per cent.

Cut now 5.7% of global demand

Quoting three sources from OPEC+, a Reuters report said OPEC+ could extend its voluntary oil production output cuts of 2.2 million barrels a day beyond June, if oil demand fails to pick up. However, it said OPEC+ is yet to start formal talks ahead of its June 1 meeting.

The report said that OPEC+ is currently cutting output by 5.86 million barrels a day, which is equal to about 5.7 per cent of global demand. Of these cuts, 2.2 million barrels per day of voluntary cut by some OPEC members will be expiring at the end of June. Around 3.66 million barrels per day of cut is valid through to the end of 2024.

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Meanwhile, increase in the crude oil inventories in the US impacted the price of crude oil earlier in the week. US commercial crude oil inventories witnessed an increase of 7.3 million barrels for the week ending April 26. Crude oil production in the US went up to 13.15 million barrels a day in February. This was one of the highest production figures in US in the past three-and-a-half years.

Efforts to broker a peace deal between Israel and Hamas are being made by Egypt. The US Secretary of State, Antony Blinken, has called on Hamas to accept Israel’s offer of ceasefire-for-hostages. Peace deal, if implemented, will help bring down tensions in West Asia region.

Dhaniya, jeera rise

May natural gas futures were trading at ₹168.60 on MCX against the previous close of ₹170, down by 0.82 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), May jeera contracts were trading at ₹24,950 against the previous close of ₹24,570, up by 1.55 per cent.

May dhaniya futures were trading at ₹7,360 on NCDEX against the previous close of ₹7,388, down by 0.38 per cent.

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