Crude oil up as US Fed pauses interest rate hike

Crude oil futures traded higher on Thursday morning as the US Federal Reserve kept the interest rates unchanged in its meeting on Wednesday.

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At 9.53 am on Thursday, January Brent oil futures were at $85.44, up by 0.96 per cent; and December crude oil futures on WTI (West Texas Intermediate) were at $81.27, up by 1.03 per cent.

November crude oil futures were trading at ₹6,778 on Multi Commodity Exchange (MCX) in the initial trading hour of Thursday morning against the previous close of ₹6,762, up by 0.24 per cent; and December futures were trading at ₹6,776 as against the previous close of ₹6756, up by 0.30 per cent.

As expected by the market, the US Federal Reserve kept the rates unchanged. However, it left open the chances of more policy tightening.

In his briefing after the meeting, Jerome Powell, Fed Chair, said the Fed still had a long way to go before the US inflation reaches the target of 2 per cent. He also noted hat the US financial conditions tightened substantially this year. There was a drop in US dollar following his comments.

A weaker dollar helps boost the demand for commodities such as crude oil that are priced in dollar in the international market.

Meanwhile, the weekly petroleum status report by the US EIA (Energy Information Administration) showed an increase in crude oil inventories in the US.

US commercial crude oil inventories increased by 0.8 million barrels for the week ending October 27 from the previous week. At 421.9 million barrels, US crude oil inventories were about 5 per cent below the five-year average for this time of year. Total motor gasoline inventories increased by 0.1 million barrels from last week and were about 2 per cent above the five-year average for this time of year.

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Total products supplied in the US over the last four-week period averaged 20.4 million barrels a day, up by 0.5 per cent from the same period last year.

US crude oil imports averaged 6.4 million barrels a day last week, an increase of 412,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6.2 million barrels a day, 1.4 per cent more than the same four-week period last year. US is a major consumer of crude oil in the global market.

November zinc futures were trading at ₹223.40 on MCX in the initial trading hour of Thursday morning against the previous close of ₹222.20, up by 0.54 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), December turmeric (farmer polished) contracts were trading at ₹14,140 in the initial trading hour of Thursday morning against the previous close of ₹14,034, up by 0.76 per cent.

December jeera futures were trading at ₹42000 on NCDEX in the initial trading hour of Thursday morning against the previous close of ₹43190, down by 2.76 per cent.