By Jigar Trivedi
WTI crude futures eased after touching a three-month excessive of $123.18 per bbl, recording the seventh weekly advance, on prospects of demand restoration from China and the US summer season driving season. Robust demand for refined merchandise underpins oil demand. US retail gasoline costs have repeatedly damaged data and not too long ago hit $5 a gallon as Americas ramped up journey regardless of excessive costs. Supply stays tight, with OPEC and its allies unable to ship in line with their quotas amid an absence of spare capability amongst producers, sanctions on Russia, and output in Libya roughly halved by political unrest.
Sentiments have been additional buoyed after EIA forecasts confirmed Russia’s manufacturing of whole liquid fuels declining from 11.3 million b/d within the first quarter of 2022 to 9.3 million b/d in 4Q23. US crude oil inventories rose by 2.025 million barrels within the week ended third June primarily on account of an enormous SPR launch. Meanwhile, crude shares on the Cushing, Oklahoma, fell by 1.593 million barrels, whereas gasoline shares fell by 0.812 million barrels. CFTC information confirmed that cash managers have elevated their bullish Nymex WTI crude oil bets by 1,676 net-long positions to 284,879, probably the most bullish in 16 weeks.
Crude oil futures outlook
Though the oil market stays tight, we may see some strain for the week amid a slew of central financial institution conferences, together with FOMC conferences. The newest US inflation print for May confirmed that costs have surged to a brand new 40-year excessive of 8.6%, including extra strain on the Fed to behave extra aggressively, pushing the financial system right into a recession. The Fed is predicted to hike charges by 50 bps factors till September and the potential for 75 bps is rising, aiding the greenback index.
The next greenback hurts all commodities denominated in {dollars}, because it makes the commodity dearer for different foreign money holders. Meanwhile, renewed restrictions in China, simply weeks after main easing in key cities akin to Shanghai may also crush on sentiments. We anticipate MCX Crude oil June futures to say no in direction of Rs 9,000 per bbl for the week.
(Jigar Trivedi, Manager — Non-Agro Fundamental Research, Anand Rathi Shares & Stock Brokers. Views expressed are the creator’s personal.)
Source: www.financialexpress.com”