Informist, Thursday, Feb 2, 2023
By Sayantan Sarkar
MUMBAI – Crude oil futures rose slightly on the Multi Commodity Exchange of India, and were flat on New York Mercantile Exchange after the Organization of the Petroleum Exporting Countries and allies stuck to their current output policy of reducing supply by 2 mln barrels per day throughout 2023.
* The cartel had been reducing supply by 2 mln bpd since November. OPEC’s Joint Ministerial Monitoring Committee had a meeting on Wednesday, in which it reaffirmed the decision taken by member countries earlier and recommended the cartel to keep the status quo on their output policy.
* OPEC is likely to monitor the situation in China with the country reopening its borders and easing domestic COVID-19 restrictions.
* “The price stability was supported by the OPEC+ meeting that resulted in no change to production policy and a weaker US currency,” Motilal Oswal Financial Services said in a note.
* At 1707 IST:
–February contract on the Multi Commodity Exchange of India was up 0.2% at 6,290 rupees per barrel.
–March contract on the New York Mercantile Exchange was flat at $76.60 per bbl.
* Additionally, the US Federal Reserve on Wednesday slowed the pace of rate increases for the second consecutive policy, raising rates by 25 basis points. This was in line with the market expectations.
* Slower pace of rate hike by the US central bank means that there will be more liquidity with investors, thereby boosting demand for crude. The US is the largest consumer of oil.
* On the bearish front, the US Energy Information Administration reported that crude oil inventories in the country rose by 4.1 mln bbl in the week ended Friday, while petroleum and distillate stocks also increased significantly.
* Outlook for the evening session by Kotak Securities:
–MCX contract is seen at 6,108-6,523 rupees per bbl
–NYMEX contract is seen at $75.90–$81.50 per bbl
End
US$1 = 82.17 rupees
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Maheswaran Parameswaran
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