Crude oil head lower on weak economic indicators

Crude oil futures traded lower on Monday morning with some recent economic indicators showing weakness in some of the major economies in the world.

At 10.03 am on Monday, October Brent oil futures were at $102.90, down by 1.02 per cent; and September crude oil futures on WTI were at $97.31, down by 1.33 per cent.

August crude oil futures were trading at ₹7,716 on Multi Commodity Exchange (MCX) during initial hours trading against the previous close of ₹7,842, down by 1.61 per cent; and September futures were trading at ₹7,588 as against the previous close of ₹7716, down by 1.66 per cent.

Below expectations

The Chinese manufacturing purchasing managers’ index (PMI) declined to 50.4 in July from 51.7 in June. China, which was on the verge of recovery in June, had witnessed Covid-induced lockdowns in July.

The Chinese PMI data was below the expectations of the market analysts. It may be mentioned here that China is a major consumer of crude oil in the global market, and a slowdown in economic activity will have an impact on the demand for the commodity.

The Japanese PMI also declined to 52.1 in July from 52.7 in June. Market analysts said pressure from rising prices and supply disruptions affected the factory output and new orders in that country. Even the US data, which was released last week, had shown a decline in the US economy for the second straight quarter.

As far as crude oil supplies are concerned, Libya is now back on track. Quoting the Libyan Oil Minister, a Bloomberg report said its production has normalised to 1.2 million barrels a day. It may be mentioned here that Libya, a member of OPEC+, was affected by a series of disruptions in recent months.

The market analysts are now waiting for Wednesday’s meeting of Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+, on the production output figures for September. The common feeling among the market players is that OPEC+ is likely to stick to its policy of modest supply increases in the coming days.

Jeera up, cottonseed oilcake down

August natural gas futures were trading at ₹625.00 on MCX in the initial hour of Monday morning against the previous close of ₹642.70, down by 2.75 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), August jeera futures were trading at ₹24,250 during the initial hours of trading against the previous close of ₹23,790, up by 1.93 per cent.

August cottonseed oilcake contracts were trading at ₹2,592 on NCDEX in the initial hour of Monday morning against the previous close of ₹2,598, down by 0.23 per cent.

Published on

August 01, 2022

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