The forecast of drop in the US crude oil inventory by an industry body made an impact on the crude oil futures on Wednesday morning.
At the time of filing this report, July Brent oil futures were down 1.44 per cent at $106.03; and June crude oil futures on WTI were at $103.50, up by 1.06 per cent.
May crude oil futures were trading at ₹7927 on Multi Commodity Exchange (MCX) in the initial hour of Wednesday morning against the previous close of ₹7885, up by 0.53 per cent; and June futures were trading at ₹7825 against the previous close of ₹7789, up by 0.46 per cent.
Citing the weekly data from the American Petroleum Institute, market reports noted that the crude oil inventory in the US declined by 3.5 million barrels last week. This is more than what market expected.
Reports said this has brought back the investors’ focus on the tight crude oil supply in the global market. However, the official data on the crude oil inventories from the US Energy Information Administration (EIA) is expected later in the day.
The crude oil futures also gained over the expected sanctions against Russia by the European Union, as the European Commission President, Ursula von der Leyen, is likely to announce the plans later in the day.
In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said crude oil settled on a weaker note in the international markets on Tuesday as WTI crude settled at $102.58 a barrel and Brent crude settled at $104.97 a barrel. In the domestic market, oil settled on a weaker note at ₹7,892 per barrel, down by 2.07 per cent.
The China Covid lockdowns continued and investors weighed a potential ban on Russian oil from the EU against a weakening demand backdrop to exert downward pressure on benchmarks, he said.
The EU firmed up plans to tighten sanctions against Russia, with Germany saying it was willing to support an immediate embargo on Russian oil. Similar data came from China, with the world’s second-largest economy reporting that factory activity contracted for a second straight month to its lowest level since February 2020 amid renewed coronavirus-induced lockdowns.
“We expect crude oil prices to remain volatile and trade under pressure in today’s session. Crude oil is having support at $100.20-$98.40 and resistance is at $104.50–106.10. In rupee terms crude oil has support at ₹7,720-7,580, and resistance at ₹8,050–8,174,” he said.
May natural gas futures futures were trading at ₹595.80 on MCX in the initial hour of Wednesday morning against the previous close of ₹607.90, down by 1.99 per cent.
NCDEX
On the National Commodities and Derivatives Exchange (NCDEX), May dhaniya futures were trading at ₹12260 in the initial hour of Wednesday morning against the previous close of ₹12192, up by 0.56 per cent.
May steel long contracts were trading at ₹56290 on NCDEX in the initial hour of Wednesday morning against the previous close of ₹57000, down by 1.25 per cent.