Informist, Wednesday, Jan 11, 2023
By Sayantan Sarkar
MUMBAI – Crude oil futures contracts on the domestic exchange fell today, tracking early losses on the New York Mercantile Exchange as inventories in the US rose sharply last week.
* The rupee’s rise against the dollar also weighed on domestic oil contracts, as it makes commodities priced in the greenback cheaper to import.
* The American Petroleum Institute reported that crude oil inventories in the US rose by nearly 15 mln barrels last week. The huge rise was unexpected, and the market will now await official data by the US Energy Information Administration later today.
* The US is the world’s largest producer of crude oil, and also its biggest consumer.
* “Traders will now keep a close watch on the official EIA data, due to be released later in the day to see if it gives the similar reading as the API. If that happens it might be bearish for prices,” said Ravindra V. Rao, head of commodity research at Kotak Securities.
* In international markets, crude prices reversed losses from earlier in the day, and are now in the green ahead of the release of the official inventory data.
* At 1630 IST:
–January contract on the Multi Commodity Exchange of India was down 0.2% at 6,164 rupees per barrel.
–February contract on the New York Mercantile Exchange was up 0.2% at $75.27 per bbl.
* Meanwhile, the market is likely to wait for US inflation data, which is due later today. US Federal Reserve officials have indicated recently that interest rates will have to climb over 5% in the country to cool down high inflation. Higher interest rates are likely to weigh on the purchasing power in the US, and depress demand for crude oil.
* “A weaker dollar might increase oil demand since it makes the commodity more affordable for buyers using foreign currencies if the inflation turns out to be lower than expected,” Angel One Commodities said.
* Outlook for the evening session:
–MCX contract is seen at 5,940-6,400 rupees per bbl
–NYMEX contract is seen at $73.40–$76.40 per bbl
US$1 = 81.58 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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