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Crude oil futures traded lower on Monday morning as data from China showed weak business activity in that country in October.
At 10 am on Monday, December Brent oil futures were at $95.14, down by 0.66 per cent, and December crude oil futures on WTI were at $87.43, down by 0.53 per cent.
November crude oil futures were trading at ₹7,203 on the Multi Commodity Exchange (MCX) in the initial trading hour of Monday morning, against the previous close of ₹7,213, down by 0.14 per cent, and December futures were trading at ₹7,139, as against the previous close of ₹7,150, down by 0.15 per cent.
Covid-related curbs
The official NBS Manufacturing PMI (Purchasing Managers Index) declined to 49.2 in October from 50.1 in September. The reading, the lowest since July, was unexpected, with the market forecasting a PMI of 50 for October. Market reports attributed the latest numbers to the strict Covid-related restrictions in several parts of China in the past few months.
The zero-Covid policy of the Chinese government has also caused apprehensions over the demand for crude oil to that country. China is a major importer of crude oil in the global market. Market reports noted that many cities in China have been implementing strict measures to control the outbreak of Covid.
While the global market was expecting a recovery in economic activity in China, these two factors affected the recovery process, impacting the demand for commodities such as crude oil.
However, a further fall in the price of crude oil was countered by the decision of the OPEC (Organization of Petroleum Exporting Countries) and its allies, known as OPEC+, to bring down output.
The recent meeting of the OPEC+ decided to implement a 2 million barrels per day production output cut from November. Added to this, sanctions on the import of Russian oil by the European Union will start from December.
In his daily market outlook, Prathamesh Mallya, AVP (Research, Non-Agri Commodities, and Currencies), Angel One Ltd, said: “We expect crude to trade lower towards ₹7,090 levels, a break of which could prompt the price to move lower to ₹6,980 levels.”
Jeera futures
November natural gas futures were trading at ₹496.10 on MCX in the initial trading hour of Monday morning, against the previous close of ₹467.90, up by 6.03 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), December cottonseed oilcake contracts were trading at ₹2,492 in the initial trading hour of Monday morning, against the previous close of ₹2,479, up by 0.52 per cent.
November jeera futures were trading at ₹23,810 on NCDEX in the initial trading hour of Monday morning, against the previous close of ₹24,200, down by 1.61 per cent.
Published on October 31, 2022
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