Crude oil futures traded lower on Wednesday morning as the industry data showed an increase in inventories in the US for the week ending February 7.
At 9.58 am on Wednesday, April Brent oil futures were at $76.76, down by 0.31 per cent, and March crude oil futures on WTI (West Texas Intermediate) were at $73.06, down by 0.35 per cent.
February crude oil futures were trading at ₹6336 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹6367, down by 0.49 per cent, and March futures were trading at ₹6331 against the previous close of ₹6358, down by 0.42 per cent.
According to the industry body American Petroleum Institute (API), crude oil inventories in the US increased by 9.04 million barrels for the week ending February 7. This would be the largest increase in the inventory levels in a year, if confirmed by the US EIA (Energy Information Administration) later on Wednesday.
Market reports said the huge increase in inventories indicates weakness in the demand for the commodity in the US market. US is a major consumer of crude oil in the global market.
Market is concerned about the economic uncertainties arising from the trade tariffs announced by the US President, Donald Trump. On Monday, he imposed 25 per cent tariffs on steel and aluminium imports to help industries in the US. Canada, Mexico, Brazil, South Korea and Vietnam are some of the major exporters of steel to the US.
Market players feel that these tariffs could impact the oil drilling infrastructure in the US, as the companies there rely on imported specialty steel for this.
Markets are now waiting for the release of the US consumer price inflation data on Wednesday. This data plays a major role in deciding US Federal Reserve’s interest rate outlook. An increase in inflation could impact the demand for commodities such as crude oil, as it affects the purchasing power of the consumer.
On Tuesday, Jerome Powell, Chair of US Federal Reserve, said that the Fed was in no hurry to reduce interest rates. An increase in interest rates strengthen dollar, impacting the demand for crude oil that is traded in dollars.
February natural gas futures were trading at ₹304.60 on MCX during the initial hour of trading on Wednesday against the previous close of ₹306.30, down by 0.56 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), March jeera contracts were trading at ₹20775 in the initial hour of trading on Wednesday against the previous close of ₹20705, up by 0.34 per cent.
March guargum futures were trading at ₹10110 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹10131, down by 0.21 per cent.
Rewrite this news article and keep the same structure, information and length.
