Crude oil gets a boost from dip in US inventory, hike in Fed rates

Crude oil futures traded higher on Thursday morning aided by the decline in the crude oil inventories in the US and an interest rate hike in that country.

At 10.04 am on Thursday, September Brent oil futures were at $107.20, up by 2.68 per cent, and September crude oil futures on WTI were at $98.28, up by 1.05 per cent.

August crude oil futures were trading at ₹7,839 on Multi Commodity Exchange (MCX) in the initial hour of Thursday morning against the previous close of ₹7,823, up by 0.20 per cent; and September futures were trading at ₹7,712 as against the previous close of ₹7,691, up by 0.27 per cent.

In line with expectations

According to the petroleum status report for the week ending July 22, which was released by US EIA (Energy Information Administration) on July 27, the US commercial crude oil inventories (excluding those in the strategic petroleum reserve) decreased by 4.5 million barrels from the previous week. At 422.1 million barrels, US crude oil inventories were about 6 per cent below the five-year average for this time of year.

Total motor gasoline inventories, which decreased by 3.3 million barrels last week, were about 4 per cent below the five-year average for this time of year.

In addition, the US Federal Reserve’s decision to increase the benchmark overnight interest rate by 75 basis points gave a boost to the crude oil futures. This move was in line with the expectations of the market. Announcing the rate hike, the Fed Chair Jerome Powell added that it will likely become appropriate to slow the pace of increases at some point.

Castorseed gain, cottonseed oil cake slips

On the National Commodities and Derivatives Exchange (NCDEX), August castorseed futures were trading at ₹7,318 or up by 0.41 per cent during the initial hour of trading against the previous close of ₹7,288. On the other hand, August cottonseed oilcake contracts were trading at ₹2,738 or down by 0.22 per cent against the previous close of ₹2,744.

Published on

July 28, 2022