Crude oil down marginally after losing over 1.5% on Tuesday

Crude oil futures traded marginally lower on Wednesday morning after losing more than 1.5 per cent on Tuesday. There was pressure on risk assets in the market despite the increased tensions in the Red Sea region.

At 9.51 am on Wednesday, March Brent oil futures were at $75.888, down by 0.01 per cent, and February crude oil futures on WTI (West Texas Intermediate) were at $70.37, down by 0.01 per cent.

January crude oil futures were trading at ₹5,882 on the Multi Commodity Exchange (MCX) during initial trading, against the previous close of ₹5,943, down by 1.03 per cent, and February futures were trading at ₹5,932 against the previous close of ₹5,989, down by 0.95 per cent.

No escape from broader pressure

Warren Patterson and Ewa Manthey, authors of ING Think’s Commodities Feed, said energy markets were unable to escape the broader pressure seen on risk assets. The weakness in oil comes despite a ratcheting up in tensions in West Asia. Iran has sent a warship to the Red Sea after the US sunk several Houthi boats in the region, following a number of attacks on commercial ships by the Houthis.

While the geopolitical situation is a concern for the oil market, a fairly comfortable oil balance over the first half of 2024 does help to ease some of these worries, they said in the Commodities Feed.

A Bloomberg report said OPEC (Organisation of the Petroleum Exporting Countries) and its allies, known as OPEC+, will hold a Joint Ministerial Monitoring Committee meeting in early February.

According to ING Think’s Commodities Feed, OPEC+ will be keen to discuss the state of the oil market, particularly given the price action seen following the announcement of deeper cuts last month from a handful of members.

“However, given the scale of cuts we are already seeing, it will be increasingly difficult for the group to cut more if needed over the course of 2024. Already, the last few rounds of cuts have been driven by voluntary reductions from individual members, rather than group-wide cuts – a sign that it is becoming more difficult to get all members on board to cut,” Warren Patterson and Ewa Manthey said in the Feed.

Jeera gains, guar gum loses

January natural gas futures were trading at ₹215.50 on MCX in the initial trading hour of Wednesday morning against the previous close of ₹212.50, down by 1.41 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), January jeera contracts were trading at ₹29,885 in the initial trading hour of Wednesday morning against the previous close of ₹29,530, up by 1.20 per cent.

January guar gum futures were trading at ₹10,183 on NCDEX in the initial trading hour of Wednesday morning, against the previous close of ₹10,326, down by 1.38 per cent.

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