Crude oil futures traded higher on Wednesday morning as the industry report showed decline in crude oil inventories in the US.
At 9.55 am on Wednesday, October Brent oil futures were at $81.17, up by 0.59 per cent, and September crude oil futures on WTI (West Texas Intermediate) were at $78.86, up by 0.656 per cent.
August crude oil futures were trading at ₹6624 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹6596, up by 0.42 per cent, and September futures were trading at ₹6503 against the previous close of ₹6474, up by 0.45 per cent.
According to the industry body American Petroleum Institute (API), crude oil inventories declined by 5.20 million barrels for the week ending August 9. Market was forecasting this to decline by 2 million barrels during the period.
However, the official data from the US EIA (Energy Information Administration) is yet to be released. US EIA data will give a clear picture on the inventory levels. US is the major consumer of crude oil in the global market, and a decline in inventories will help boost the demand for the commodity.
International Energy Agency’s outlook for global oil demand remained largely unchanged from last month’s report. IEA’s Oil Market Report for August projected growth at slightly less than 1 million barrels a day in both 2024 and 2025.
In June, Chinese oil demand contracted for a third consecutive month, driven by a slump in industrial inputs, including for the petrochemical sector, it said. Preliminary trade data point to further weakness in July, as crude oil imports sank to their lowest level since the stringent lockdowns of September 2022.
By contrast, demand in advanced economies, especially for US gasoline, has shown signs of strength in recent months. The US economy, where one-third of global gasoline is consumed, has outperformed peers, with a resilient service sector buttressing miles driven. As a result, OECD oil consumption flipped from 300,000 barrels a day annual contraction in first quarter of 2024 to growth of 190,000 barrels a day in the second quarter, it said.
Meanwhile, the producer price index data for US, which was released on Tuesday, was softer than the market expectations. This made market participants to feel that the US Federal Reserve will have more room to cut interest rates in September.
Market is now waiting for the release of US consumer price index data later on Wednesday.
August natural gas futures were trading at ₹182 on MCX during the initial hour of trading on Wednesday against the previous close of ₹181, up by 0.55 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), August dhaniya contracts were trading at ₹6678 in the initial hour of trading on Wednesday against the previous close of ₹6752, down by 1.10 per cent.
August cottonseed oilcake futures were trading at ₹2870 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹2903, down by 1.14 per cent.