Crude oil futures dip a tad despite OPEC plan to cut output

Crude oil futures traded marginally lower on Wednesday morning in spite of a warning by OPEC (Organization of the Petroleum Exporting Countries) and its allies, known as OPEC+, to cut production to control the decline in prices.

At 10.01 am on Wednesday, October Brent oil futures were at $99.61, down by 0.61 per cent, and September crude oil futures on WTI were at $93.37, down by 0.39 per cent.

September crude oil futures were trading at ₹7,468 on Multi Commodity Exchange (MCX) on Wednesday morning against the previous close of ₹7,502, down by 0.45 per cent; and October futures were trading at ₹,7444 against the previous close of ₹7475, down by 0.41 per cent.

Cuts not imminent

Quoting sources, a Reuters report said production cuts by OPEC+ may not be imminent, and are likely to coincide with the return of Iran to oil markets should that country clinch a nuclear deal with the West.

A Bloomberg report, which had quoted Saudi Energy Minister Prince Abdulaziz bin Salman, stated that OPEC stands ready to cut output to correct a recent price decline driven by poor futures market liquidity and macro-economic fears. Following this report, oil prices had gone up by around 4 per cent in Tuesday’s session.

Meanwhile, media reports quoting a senior US official said that Iran had dropped some of its main demands on reviving the 2015 nuclear deal. A revival of the deal will lead to the lifting of sanctions on Iranian oil by western nations and augmented global supply.

A weekly report by American Petroleum Institute on Tuesday mentioned that crude oil inventories in the US had declined by 5.6 million barrels last week. The market was expecting a drop of 900,000 barrels during the period.

However, the weekly petroleum status report by the US Energy Information Administration (EIA) is expected later on Wednesday.

Cotton dips, guar gum up

October cotton futures were trading at ₹38,800 on MCX on Wednesday morning against the previous close of ₹39,120, down by 0.82 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), September guar gum futures were trading at ₹8,650 on Wednesday morning against the previous close of ₹8,602, up by 0.56 per cent.

September cottonseed oilcake contracts were trading at ₹2,690 on NCDEX on Wednesday morning against the previous close of ₹2,720, down by 1.10 per cent.

Published on

August 24, 2022

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