Crude oil futures fell more than 1 per cent on Wednesday morning after US President Donald Trump announced that Venezuela would supply millions of barrels of oil to the US.
At 9.56 am on Wednesday, March Brent oil futures were at $60.02, down 1.12 per cent, and February WTI (West Texas Intermediate) crude oil futures were at $56.26, down 1.52 per cent. January crude oil futures were trading at ₹5076 on Multi Commodity Exchange (MCX) during the initial hour of trading on Wednesday against the previous close of ₹5210, down by 2.57 per cent, and February futures were trading at ₹5100 against the previous close of ₹5219, down by 2.28 per cent.
In a post on the social media platform Truth Social, Trump said: “I am pleased to announce that the Interim Authorities in Venezuela will be turning over between 30 and 50 MILLION Barrels of High Quality, Sanctioned Oil, to the United States of America. This Oil will be sold at its Market Price, and that money will be controlled by me, as President of the United States of America, to ensure it is used to benefit the people of Venezuela and the United States! I have asked Energy Secretary Chris Wright to execute this plan, immediately. It will be taken by storage ships, and brought directly to unloading docks in the United States.”
Venezuela, which holds the world’s largest proven oil reserves, produces less than 1 per cent of the current global output. Market reports said current production is below 1 million barrels a day.
Market supply outlook
In their recent Commodities Feed, Warren Patterson, Head of Commodities Strategy of ING Think, and Ewa Manthey, Commodities Strategist, said a significant investment is required in the Venezuelan energy sector, which foreign companies may be reluctant to undertake unless there is a more attractive investment environment or some form of guarantee for investors.
Meanwhile, data released by the industry body, the American Petroleum Institute (API), showed a decline in US crude oil inventories for the week ending January 2. According to API, crude oil inventories declined by 2.77 million barrels for the week ending January 2.
Official data from the US EIA (Energy Information Administration) is expected later on Wednesday. EIA data will give a clear picture of the US crude oil inventory levels for the week ending January 2.
Other commodity moves
January nickel futures were trading at ₹1893 on MCX during the initial hour of trading on Wednesday against the previous close of ₹1777.50, up by 6.50 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), April turmeric (farmer polished) contracts traded at ₹18482 in the initial hour of trading on Wednesday, up 0.75 per cent from the previous close of ₹18344.
January guargum futures were trading at ₹10650 on NCDEX in the initial hour of trading on Wednesday against the previous close of ₹10845, down by 1.80 per cent.