Crude oil futures saw a decline on Friday morning following data indicating a contraction in manufacturing activities in China during May. As of 9:53 am on Friday, August Brent oil futures were at $81.69, a decrease of 0.23%, while July crude oil futures on West Texas Intermediate (WTI) were at $77.64, down by 0.35%. June crude oil futures were trading at ₹6,477 on the Multi Commodity Exchange (MCX) during the initial hour of trading on Friday morning, compared to the previous close of ₹6,488, down by 0.17%. July futures were trading at ₹6,472, down by 0.12% from the previous close of ₹6,480. Data from the National Bureau of Statistics of China revealed that the purchasing managers’ index (PMI) declined to 49.5 in May from 50.4 in April. Market expectations had been for a PMI of 50.5 for May. Both new orders and foreign sales saw a decrease during this period.
China’s non-manufacturing PMI also declined to 51.1 in May from 51.2 in April, with market expectations set at 51.5.This data indicated a cooling of business activities in China after growth in March and April, leading to market concerns over the demand for commodities such as crude oil. China remains one of the major consumers of crude oil globally. Meanwhile, official data from the US Energy Information Administration (EIA) showed a decline in crude oil inventories and an increase in gasoline inventories in the United States. According to the EIA, commercial crude oil inventories decreased by 4.2 million barrels for the week ending May 24, compared to an increase of 1.82 million barrels in the previous week. The market had anticipated a decline of 1.6 million barrels for the week ending May 24. At 454.7 million barrels, US crude oil inventories were approximately 4% below the five-year average for this time of the year.
Total motor gasoline inventories increased by 2 million barrels for the week ending May 24, compared to a decline of 0.94 million barrels in the previous week. Total motor gasoline inventories were about 1% below the five-year average for this time of year. Total products supplied in the US over the last four-week period averaged 19.9 million barrels per day, down by 0.1% from the same period last year. Over the past four weeks, motor gasoline product supplied averaged 9 million barrels per day, down by 1.7% from the same period last year. Available data showed that the US economy grew by 1.3% in the first quarter, with market expectations set at 1.6% growth for the quarter.
The President of the Dallas Federal Reserve, Lorie Logan, expressed ongoing concerns about upside risks to inflation despite recent easing. According to a Reuters report, Logan stated, “It’s really important that we don’t lock into any particular path for monetary policy. I think it’s too soon to really be thinking about rate cuts.” The market sentiment is that any decision to delay interest rate cuts could impact the price of commodities such as crude oil. June natural gas futures were trading at ₹212.90 on MCX during the initial hour of trading on Friday morning, down by 1.89% from the previous close of ₹217.On the National Commodities and Derivatives Exchange (NCDEX), June cottonseed oilcake contracts were trading at ₹2,747 in the initial hour of trading on Friday morning, down by 0.43% from the previous close of ₹2,759. June jeera futures were trading at ₹28,270 on NCDEX in the initial hour of trading on Friday morning, down by 0.72% from the previous close of ₹28,475.
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