Crude oil futures traded lower on Friday morning due to concerns over slow economic growth in China and its impact on the demand for crude oil. The drop was despite geopolitical tensions and forecasts for good demand by different organisations,
At 9.54 am on Friday, March Brent oil futures were at $78.88, down by 0.28 per cent, and March crude oil futures on WTI (West Texas Intermediate) were at $73.86, down by 0.12 per cent.
January crude oil futures were trading at ₹6,150 on the Multi Commodity Exchange (MCX) during initial trading, against the previous close of ₹6,152, down by 0.03 per cent, and February futures were trading at ₹6,152, as against the previous close of ₹6,157, down by 0.08 per cent.
No momentum yet in Chinese growth
Recent data released by China showed that GDP (gross domestic product) grew 5.2 per cent in 2023, beating the Chinese government’s target of 5 per cent. Expressing concern over the impact of such economic indicators on the demand for commodities such as crude oil in the local market, some market reports noted that post-Covid, economic recovery is yet to gain momentum in China.
According to a weekly petroleum status report by the US EIA (Energy Information Administration) for the week ending January 12, US commercial crude oil inventories decreased by 2.5 million barrels from the previous week. At 429.9 million barrels, US crude oil inventories were about 3 per cent below the five-year average for this time of year.
However, the market was expecting a decline of 313,000 barrels for the week ending January 12.
The International Energy Agency’s Oil Market Report for 2024 said global oil supply is forecast to rise by 1.5 million barrels a day to a new high of 103.5 million barrels a day in 2024. The Americas – led by the US, Brazil, Guyana and Canada – will dominate gains in 2024, just as the region did last year, it said.
After a steep rise in output in the fourth quarter of 2023, global oil supply is expected to decline in January as a blast of cold weather sweeping through the US and Canada takes a toll on oil operations, it said.
The latest monthly report by OPEC said global oil demand growth forecast for 2024 remains unchanged at 2.2 million barrels a day.
Guar gum gains, jeera loses
Meanwhile, US-led forces carried out more air strikes on Houthi targets in Yemen. This followed repeated attacks by Houthis on shipping lines on the Red Sea route. Geopolitical risks in Middle East such as attacks on Houthi targets and the Israel-Hamas war helped boost the crude oil market.
February natural gas futures were trading at ₹201.30 on the MCX, against the previous close of ₹200.40, up by 0.45 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), February guar gum contracts were trading at ₹10,804, against the previous close of ₹10,771, up by 0.31 per cent.
January jeera futures were trading at ₹30,290 on NCDEX in the initial trading hour of Friday morning, against the previous close of ₹31,550, down by 3.99 per cent.
