Informist, Tuesday, Jan 31, 2023
By Sayantan Sarkar
MUMBAI – Crude oil futures on the Multi Commodity Exchange of India fell today, tracking those on New York Mercantile Exchange as prospect of higher interest rates and robust supply from Russia weighed on sentiment.
* Investors are cautious ahead of the two-day policy meeting of the US Federal Reserve, which is scheduled to start later today. The market expects the US central bank to slow its pace of interest rate hikes.
* However, recent positive economic data from the US suggests that the US Fed may have enough headroom to raise interest rates sharply. This weighed on prices today. The US is the world’s largest economy and less liquidity in the market is likely to limit demand for oil.
* Additionally, supply of crude oil from Russia is not slowing down despite Western sanctions and a price cap imposed by the Group of Seven countries.
* “Russia appears to be coping amazingly well with the West’s oil sanctions. In January, considerably more crude oil was exported from the Russian Baltic Sea ports of Primorsk and Ust-Luga than in the previous month,” Commerzbank AG said in a report, adding that the trend is likely to continue inn February.
* At 1640 IST:
–February contract on the Multi Commodity Exchange of India was down 1.7% at 6,307 rupees per barrel.
–March contract on the New York Mercantile Exchange was down 1.5% at $76.76 per bbl.
* The market will focus on Wednesday’s meeting of the Organization of the Petroleum Exporting Countries and its allies’ Joint Ministerial Monitoring Committee. The OPEC panel is expected to discuss oil market dynamics, and might call for a full member meeting of OPEC and its allies if it deemed necessary.
* The cartel and its allies have been reducing oil supply by 2 mln barrels per day since November, and plans to cut output throughout 2023. Reports have suggested that OPEC and its allies are likely to stick to their current output policy.
* The price of India’s crude oil basket was down by $1.5 at $83.15 a bbl on Monday, according to data from the Petroleum Planning and Analysis Cell.
* Outlook for the evening session by Angel One Commodities:
–MCX contract is seen at 6,280-6,550 rupees per bbl
–NYMEX contract is seen at $79.40–$79.30 per bbl
US$1 = 81.92 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Avishek Dutta
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