futures traded lower on Tuesday morning after rising nearly $2 a barrel in the previous trading session, as markets assessed the impact of Russian diesel exports amid rising tensions in West Asia.
At 10.03 am on Tuesday, December Brent oil futures were at $105.43, down by 1.14 per cent, and November crude oil futures on WTI (West Texas Intermediate) were at $92.57, down by 1.25 per cent. October crude oil futures were trading at ₹8825 on (MCX) during the initial hour of trading on Tuesday against the previous close of ₹8980, down by 1.73 per cent, and November futures were trading at ₹8785 against the previous close of ₹8935, down by 1.68 per cent.
Russian Deputy Prime Minister Alexander Novak said on Monday that Russia will be able to return diesel exports to levels above those US President Donald has outlined under a deal with Russia.
Speaking to Rossiya-24 state TV channel, Novak said: “We will see how the situation develops further, but Russia has the capacity to increase diesel fuel exports. By the end of the year, exports could reach 3-3.5 million tonnes per month, returning to the levels seen before the crisis,” he said.
In their Commodities Feed for Tuesday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said the weakness in the oil market following Trump’s announcement of an ‘energy ceasefire’ between Russia and the Ukraine was short-lived. That goes, too, for the US-Russia diesel export deal.
“ICE Brent settled 1.8 per cent higher, just shy of $107 a barrel on Monday — the highest close since mid-September. Clearly, the market is more concerned over recent developments in West Asia, with Houthi attacks on Saudi Arabia and the lingering risks to oil flows from the Persian Gulf. In addition, there’s considerable scepticism over the Russia-Ukraine energy ceasefire, particularly with reports that Russia has hit Ukrainian energy targets since Trump announced it. While diesel initially saw some weakness following the US-Russia deal, strength has returned. The volumes suggested are doing little to offset the tightness in the global middle distillate market,” they said.
The Persian Gulf could see further bypass volumes in a relatively short time period. The Saudi Energy Minister said that the country is looking to expand its pipeline export capacity to 10 million barrels a day, up from a current 7 million barrels a day. About 1.2 million barrels a day of this expansion could come from converting a gas pipeline to crude and could be available to transport oil within 7-8 weeks. Expansion beyond this would take more time, possibly as much as three years. Shipping larger volumes from the Red Sea would also require further investment in loading capacity at ports, they said.
Meanwhile, hurricane activity in the Gulf of Mexico continues to disrupt offshore operations for US producers; they have shut in almost 605,000 barrels a day of oil production, which is equivalent to nearly 30 per cent of total US production in the Gulf of Mexico, according to the Marine Minerals Administration. However, output has been recovering in recent days, with as much as 1.5 million barrels a day shut-in on Friday, they said.
October aluminium futures were trading at ₹329.90 on MCX during the initial hour of trading on Tuesday against the previous close of ₹331.60, down by 0.51 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), October turmeric (farmer polished) contracts were trading at ₹24750 in the initial hour of trading on Tuesday against the previous close of ₹23926, up by 3.44 per cent.
November castor seed futures were trading at ₹8322 on NCDEX in the initial hour of trading on Tuesday against the previous close of ₹8366, down by 0.53 per cent.