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Crude oil recovers after 5% fall on Thursday to below $80/barrel

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Crude oil futures traded higher on Friday morning after falling nearly five per cent on Thursday.

At 9.53 am on Friday, January Brent oil futures were at $77.53, up 0.14 per cent, and December crude oil futures on WTI (West Texas Intermediate) were at $73, up 0.14 per cent.

December crude oil futures were trading at ₹6,120 on Multi Commodity Exchange (MCX) during initial trading against the previous close of ₹6,072, up 0.79 per cent, and November futures were trading at ₹6077 as against the previous close of ₹6026, up by 0.85 per cent.

One of the factors that affected Thursday’s market was the more-than-expected increase in crude oil inventories in the US for the week ending November 10. The US EIA (Energy Information Administration) data showed crude oil inventories went up by 3.6 million barrels for the week ending November 10 against the market expectations of an increase of 1.8 million barrels.

Factors such as increase in the number of people claiming unemployment benefits in the US and decline in October retail sales in the US also impacted the price of the commodity on Thursday.

Little developments in fresh fundamentals

In their analysis in ING Think’s Commodities Daily on Friday, Warren Patterson, Head of Commodities Strategy, and Ewa Manthey, Commodities Strategist, said crude oil came under further pressure on Thursday, trading down to its lowest level since July. There was little in the way of fresh fundamental developments behind the move. Instead, a break below $80 a barrel appears to have brought a fair amount of technical selling, the analysts said.

Stating that the oil balance for the remainder of this year is not as tight as initially expected, ING Think report said higher-than-expected supply has eroded a large amount of the expected deficit over fourth quarter of 2023. And as things stand, the market is still expected to return to surplus in the first quarter of 2024, it said.

Prices are trading down at levels that will raise some concerns among OPEC (Organisation of the Petroleum Exporting Countries) members, particularly Saudi Arabia. “The price weakness we are seeing means that it is increasingly likely that the Saudis will roll over their additional voluntary cut of 1 million barrels a day into early next year. Doing this should help erase the expected surplus and provide some support to the market,” the analysts said. There will be growing noise around OPEC policy in the coming weeks with the group set to meet in Vienna on November 26, the report said.

Castorseed, guar gum head south

November natural gas futures were trading at ₹257.80 on MCX in the initial trading hour of Friday morning against the previous close of ₹254.50, up 1.30 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), December castorseed contracts were trading at ₹5908 in the initial trading hour of Friday morning against the previous close of ₹5,936, down 0.47 per cent.

December guar gum futures were trading at ₹11,800 on NCDEX in the initial trading hour of Friday morning against the previous close of ₹11,851, down 0.43 per cent.



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