Crude oil futures traded higher on Monday morning following reports that Ukraine launched an attack on a nuclear site in Russia.
At 9.55 am on Monday, November Brent oil futures were at $67.33, up by 0.16 per cent, and October crude oil futures on WTI (West Texas Intermediate) were at $63.80, up by 0.22 per cent. September crude oil futures were trading at ₹5,592 on Multi Commodity Exchange (MCX) during the initial hour of trading on Monday against the previous close of ₹5,572, up by 0.36 per cent, and October futures were trading at ₹5,579 against the previous close of ₹5,558, up by 0.38 per cent.
A Reuters report said the Kursk nuclear power plant in Russia, just 60 km from the border with Ukraine, was attacked by Ukraine on Sunday. Russian air defences shot down a drone that detonated near the plant just after midnight, damaging an auxiliary transformer and forcing a 50 per cent reduction in the operating capacity at reactor no. 3, the report said.
This attack occurred despite international efforts to bring an end to the Russia-Ukraine conflict.
In their Commodities Feed for Monday, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said oil prices managed to finish last week higher, settling up almost 2.9 per cent higher as enthusiasm over a potential Russia-Ukraine ceasefire wanes. Uncertainty prevails as US President Donald Trump once again threatens to impose tougher sanctions on Russia unless there’s a deal to end the war. Trump said there needs to be more clarity within roughly two weeks.
However, the market may be reluctant to read too much into this latest threat, given the lack of action taken by the US administration against Russia following the Trump-Putin summit, they said.
“In the near term, we may see the oil market benefit following Fed Chair Jerome Powell’s Jackson Hole speech, which was largely dovish and provided a boost to most risk assets. The market is pricing in more than an 85 per cent probability that the Fed cuts interest rates by 25 basis points in September, up from around 72 per cent ahead of Powell’s speech,” they said.
It’s looking increasingly likely that secondary tariffs against India for their purchases of Russian oil will go ahead on August 27. There appears to be little progress in trade talks between India and the US, since the US announced the tariff earlier in the month, they said.
Furthermore, Indian refiners have been showing increased interest in Russian oil, after state refiners initially paused purchases until there is clarity from the government. If India continues to buy Russian oil despite the 25 per cent secondary tariff, it does little to change the market outlook. Instead, it only confirms the bearish outlook for oil prices, they said.
August menthaoil futures were trading at ₹938.20 on MCX during the initial hour of trading on Monday against the previous close of ₹954.40, down by 1.70 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), September jeera contracts were trading at ₹19,750 in the initial hour of trading on Monday against the previous close of ₹19,705, up by 0.23 per cent.
September guargum futures were trading at ₹9,695 on NCDEX in the initial hour of trading on Monday against the previous close of ₹9,790, down by 0.97 per cent.