Crude oil futures traded higher on Thursday morning as market players felt the US Federal Reserve would reduce interest rate in September.
At 9.52 am on Thursday, August Brent oil futures were at $78.72, up by 0.40 per cent, and July crude oil futures on WTI (West Texas Intermediate) were at $74.48, up by 0.55 per cent.
June crude oil futures were trading at ₹6,223 on Multi Commodity Exchange (MCX) during initial trading on Thursday morning against the previous close of ₹6190, up by 0.53 per cent, and July futures were trading at ₹6,219 against the previous close of ₹6194, up by 0.40 per cent.
Impact of Fed move
According to Reuters, nearly two-thirds of economists polled by it indicated an interest rate cut by the US Federal Reserve in September. Reuters conducted this poll between May 31 and June 5. Reduction in interest rates will help bring down the cost of borrowing. This will boost the economic activities, which, in turn, will boost the demand for commodities such as crude oil.
In the recent past, several officials from the US Federal Reserve were of the view that the Fed is not in a hurry to reduce interest rate cut. It is waiting for the inflation to come down before taking any decision on rate cut.
Meanwhile, petroleum status report by the US EIA (Energy Information Administration) for the week ending May 31 showed that US commercial crude oil inventories increased by 1.2 million barrels from the previous week. At 455.9 million barrels, US crude oil inventories were about 4 per cent below the five-year average for this time of year. Market was expecting crude oil inventories to decline by 2.1 million barrels for the week ending May 31.
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Total motor gasoline inventories increased by 2.1 million barrels from last week, and were about 1 per cent below the five-year average for this time of year.
Total products supplied over the last four-week period averaged 20 million barrels a day, up by 1.3 per fent from the same period last year.
US crude oil imports averaged 7.1 million barrels a day last week, an increase of 289,000 barrels a day from the previous week. Over the past four weeks, crude oil imports averaged about 6.8 million barrels a day, 3.5 per cent more than the same four-week period last year.
Jeera, turmeric sizzle
June natural gas futures were trading at ₹230.80 on MCX against the previous close of ₹228.20, up by 1.14 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), June jeera contracts were trading at ₹29200 against the previous close of ₹29140, up by 0.21 per cent.
June turmeric (farmer polished) futures were trading at ₹17336 on NCDEX against the previous close of ₹17244, down by 0.53 per cent.