Sage Investment Club

Crude oil traded higher on Friday morning following better-than-expected US GDP data in the fourth quarter of 2022. At 10.01 am on Friday, March Brent oil futures were up 0.47 per cent at $87.88, and March crude oil futures on WTI were at $81.38, up by 0.46 per cent. February crude oil futures were trading at ₹6,657 on Multi Commodity Exchange (MCX) in early trade against the previous close of ₹6,533, up 1.90 per cent, and March futures were trading at ₹6,690 against the previous close of ₹6583, up by 1.63 per cent.
Offset by decreases
According to the advance estimate released by the Bureau of Economic Analysis (BEA) of the US, the real gross domestic product (GDP) of the US increased at an annual rate of 2.9 per cent in the fourth quarter of 2022. However, the market was expecting it to be at 2.6 per cent. In fact, the real GDP increased 3.2 per cent in the third quarter of 2022. The BEA estimate said the increase in real GDP reflected increases in private inventory investment, consumer spending, federal government spending, state and local government spending, and non-residential fixed investment that were partly offset by decreases in residential fixed investment and exports. The increase in private inventory investment was led by manufacturing (mainly petroleum and coal products and chemicals) as well as mining, utilities, and construction industries (led by utilities). The increase in consumer spending reflected increases in both services and goods. Within services, the increase was led by healthcare, housing and utilities, and ‘other’ services (notably, personal care services). Within goods, the leading contributor was motor vehicles and parts. Within federal government spending, the increase was led by non-defence spending. The increase in state and local government spending primarily reflected an increase in compensation of state and local government employees. Within non-residential fixed investment, an increase in intellectual property products was partially offset by a decrease in equipment.On the deceleration in real GDP in the fourth quarter, the BEA estimate said it primarily reflected a downturn in exports and decelerations in non-residential fixed investment, state and local government spending, and consumer spending. These movements were partly offset by an upturn in private inventory investment, an acceleration in federal government spending, and a smaller decrease in residential fixed investment. Imports decreased less in the fourth quarter than in the third quarter, it said. The market is now expecting the US Fed Reserve to resort to an interest rate increase of 25 basis points when it meets next. Any such move would be positive for the market. Another factor that boosted the sentiments of the market was the decrease of Covid cases in China. Citing the Centre for Disease Control and Prevention of China, a Reuters report said critically ill Covid cases in China are down 72 per cent from a peak early this month while daily deaths among the patients in hospitals have dropped 79 per cent from their peak. Visits to fever clinics fell 96.2 per cent from a peak of 2.867 million on December 22 to 110,000 on January 23.China recently relaxed its strict Covid control measures in an effort to boost its economy. The decrease in the number of Covid cases will help boost sentiments in the crude oil market as China is a significant consumer.
Dhaniya, jeera gain
February natural gas futures were trading at ₹239.70 on MCX in the initial trading hour of Friday morning against the previous close of ₹245.40, down by 2.32 per cent. On the National Commodities and Derivatives Exchange (NCDEX), April dhaniya contracts were trading at ₹8,180 during initial trading hours against the previous close of ₹8098, up by 1.01 per cent. March jeera futures were trading at ₹31,850 on NCDEX against the previous close of ₹31485, up by 1.16 per cent.SHARE
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