Crude oil futures traded lower on Wednesday morning as an industry report showed an increase in inventories in the US.
At 9.51 am on Wednesday, October Brent oil futures were at $77.08, down by 0.16 per cent, and October crude oil futures on WTI (West Texas Intermediate) were at $73.02, down by 0.20 per cent.
September crude oil futures were trading at ₹6140 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹6154, down by 0.23 per cent, and October futures were trading at ₹6104 against the previous close of ₹6112, down by 0.13 per cent.
According to the industry body American Petroleum Institute (API), crude oil inventories in the US increased by 0.347 million barrels for the week ending August 16. Market was expecting the crude oil inventories to decline by 2.8 million barrels during the period.
US is a major consumer of crude oil, and an increase in inventories indicates the decline in the demand for the commodity after the travel-heavy summer season came to an end in that country.
However, official data from the US EIA (Energy Information Administration) is expected later in the day. It will give a clear picture on the crude oil inventory levels for the week ending August 16.
In their Commodities Feed, ING Think’s Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, said that oil prices remain under pressure. ICE Brent continues to trade sub-$78 a barrel, having traded to more than $82 a barrel early last week.
Hopes of a cease-fire between Israel and Hamas have weighed on oil, along with lingering demand concerns. While weaker Chinese demand has been well reported, refinery margins around the globe have been under pressure for much of August, suggesting that these demand concerns are not isolated to just China, they said.
The weakness in the oil market leaves OPEC+ in a difficult situation. Currently, they are set to start gradually unwinding supply cuts from October. “However, the negative sentiment in the market may make the group think twice about sticking to this plan. Unfortunately for OPEC+, the global oil balance is set to be looser next year, suggesting that plans to ease cuts through 2025 may also have to be revisited,” they said in the Commodities Feed.
August zinc futures were trading at ₹266.30 on MCX during the initial hour of trading on Wednesday against the previous close of ₹264.60, up by 0.64 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), September castorseed contracts were trading at ₹6255 in the initial hour of trading on Wednesday against the previous close of ₹6226, up by 0.47 per cent.
September jeera futures were trading at ₹24515 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹24845, down by 1.33 per cent.
- Also read: Crude Check: Outlook is uncertain