A further interest rate hike by the US Federal Reserve and a rise in crude oil inventory in the US, dragged crude oil lower on Thursday morning.
At 10 am on Thursday, February Brent oil futures were at $82.06, down by 0.77 per cent, and January crude oil futures on WTI were at $76.54, down by 0.96 per cent.
December crude oil futures were trading at ₹6,334 on the Multi Commodity Exchange (MCX) in the initial trading hour of Thursday morning, against the previous close of ₹6,402, down by 1.06 per cent, and January futures were trading at ₹6,362, as against the previous close of ₹6,425, down by 0.98 per cent.
The US Federal Reserve increased interest rates by 50 basis points on Wednesday, a hike that was expected by the markets. However, it warned that interest rates could peak higher than expected in 2023.
Keystone pipeline restored
Meanwhile, the petroleum status report for the week ending December 9, which was released by the US EIA (Energy Information Administration) on December 14, showed an increase of 10.2 million barrels in US commercial crude oil inventories (excluding those in the strategic petroleum reserve) from the previous week. At 424.1 million barrels, US crude oil inventories were about 6 per cent below the five-year average for this time of year. This was the largest build-up of crude oil inventories since March 2021. An increase in the inventory indicated weak demand for the commodity.
Total products supplied in the US over the last four-week period averaged 19.8 million barrels a day, down by 6.9 per cent from the same period last year.
Crude oil supplies to the US from Canada, which was affected by an accident in Canada’s Keystone pipeline in the US last week, have restarted now.
In a media statement, Canada’s TC Energy said the pipeline was restarted on Wednesday. The restart facilitates safe transportation of energy that customers and North Americans rely on, it said.
The affected segment of the Keystone Pipeline System remains safely isolated as investigation, recovery, repair and remediation continues to advance, it said.
The Keystone Pipeline System, which has the capacity to transport 622,000 barrels a day of crude oil, transports heavy Canadian crude from Alberta to refiners in the US Midwest and the Gulf Coast.
The International Energy Agency’s latest report said oil prices could go up next year as China is recovering from the Covid-induced demand downturn. Added to this, it noted that sanctions on the import of crude oil from Russia will bring down output from that country. Russia is a major producer of crude oil in the global market.
Dhaniya, turmeric turn hot
December natural gas futures were trading at ₹539.70 on MCX in the initial trading hour of Thursday morning, against the previous close of ₹532.60, up by 1.33 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), December dhaniya contracts were trading at ₹8,664 in the initial trading hour of Thursday morning, against the previous close of ₹8,498, up by 1.95 per cent.
December turmeric (farmer polished) futures were trading at ₹7,400 on NCDEX in the initial trading hour of Thursday morning, against the previous close of ₹7,260, up by 1.93 per cent.