Crude oil futures traded lower on Monday morning despite China’s move to bring down stamp duty on stock trading.

At 9.52 a.m. on Monday, November Brent oil futures were at $83.80, down by 0.18 per cent; and October crude oil futures on WTI (West Texas Intermediate) were at $79.77, down by 0.08 per cent.

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September crude oil futures were trading at ₹6597 on Multi Commodity Exchange (MCX) in the initial trading hour of Monday morning against the previous close of ₹6503, up by 1.45 per cent; and October futures were trading at ₹6581 as against the previous close of ₹6489, up by 1.42 per cent.

In a statement on Sunday, Chinese Finance Ministry said that it was reducing the duty on stock trades to invigorate the capital market and boost investor confidence. China’s economic recovery is not on the expected lines, and the Chinese authorities are trying different measures to boost the economy.

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Last week, China’s Central bank had reduced the one-year loan prime rate from 3.55 per cent to 3.45 per cent. New and outstanding loans in China are based on one-year loan prime rate. However, this measure had failed to enthuse the markets.

China is a major consumer of crude oil in the global market, and an economic slowdown in that country will impact the demand for crude oil.

Meanwhile, the Chair of the US Federal Reserve, Jerome Powell, has indicated at the likelihood of interest rate hikes in that country.

Speaking at the Jackson Hole Symposium in US on Friday, he said inflation remains too high. He said Fed is prepared to raise interest rates further if appropriate.

Many in the market feel that higher interest rates could slow down the economic activities, impacting the demand for commodities such as crude oil.

Also Read | Crude oil declines as data of major economies disappoint

However, the factors such as the decline in the crude oil inventories in the US, and the production output cuts by major producers such as Saudi Arabia supported the market.

September menthaoil futures were trading at ₹1066.30 on MCX in the initial trading hour of Monday morning against the previous close of ₹1025.30, up by 4 per cent.

Published on August 28, 2023

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