Crude oil futures traded higher on Monday morning supported by the latest data showing improved manufacturing activity in China.
At 9.56 am on Monday, February Brent oil futures were at $72.25, up by 0.57 per cent, and January crude oil futures on WTI (West Texas Intermediate) were at $68.39, up by 0.57 per cent.
December crude oil futures were trading at ₹5801 on Multi Commodity Exchange (MCX) during the initial hour of trading on Monday against the previous close of ₹5814, down by 0.22 per cent, and January futures were trading at ₹5795 against the previous close of ₹5808, down by 0.22 per cent.
The Caixin China General Manufacturing PMI increased to 51.5 in November from 50.3 in October. Market was expecting it to be at 50.5. This growth was driven by the increase in foreign orders since February 2023 and exports.
China is a major consumer of crude oil in the global market, and an improvement in economic activities in that country would help boost the demand for commodities such as crude oil.
Crude oil prices were also supported by tensions in West Asia region. Israel and Lebanon, which agreed for a ceasefire on Wednesday, have accused each other of violating the ceasefire conditions. Meanwhile, Iran extended its support to Syrian government after insurgents took control of Syria’s Aleppo city. Market players feel that increase in tensions in West Asia could lead to supply disruptions from the region.
OPEC+ (Organization of the Petroleum Exporting Countries, and allies) will hold its meeting on December 5 to discuss output policy for 2025. The meeting was originally scheduled for December 1.
In their Commodities Daily feed, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said a handful of OPEC+ members are set to gradually bring 2.2 million barrels a day of supply back onto the market next year. However, the oil balance does not need this additional supply as it will push the market into a large surplus.
“The challenge is that the group needs to find a balance between trying to support the market and limiting its loss in market share. Complicating matters still further, some members are still failing to stick to their agreed production levels,” they said.
December natural gas futures were trading at ₹270.90 on MCX during the initial hour of trading on Monday against the previous close of ₹283.20, down by 4.34 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), December cottonseed oilcake contracts were trading at ₹2700 in the initial hour of trading on Monday against the previous close of ₹2727, down by 0.99 per cent.
December jeera futures were trading at ₹24855 on NCDEX in the initial hour of trading on Monday against the previous close of ₹25255, down by 1.58 per cent.
