Crude oil futures traded lower on Friday morning as the Bank of England (BoE) delivered an interest rate hike that was above market expectations.
At 9.53 am on Friday, August Brent oil futures were at $73.25, down by 1.20 per cent; and August crude oil futures on WTI were at $68.64, down by 1.25 per cent.
July crude oil futures were trading at ₹5,654 on Multi Commodity Exchange (MCX) in the initial trading hour of Friday morning against the previous close of ₹5,705, down by 0.89 per cent; and August futures were trading at ₹5,691 as against the previous close of ₹5,740, down by 0.85 per cent.
On Thursday, the monetary policy committee of BoE decided to increase the interest rates from 4.5 per cent to 5 per cent, a 50 basis points hike, in its effort to control inflation in that country. However, the market was expecting the interest rate to be hiked by 25 basis points.
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This interest rate hike follows the recent statement of the US Fed Reserve Chair, Jerome Powell, before the US House Financial Services Committee. He had mentioned that a majority of policymakers see two more interest rate hikes of 25 basis points each by the end of the year.
Such interest rate hikes by some major economies across the world have led to apprehension over the demand for crude oil in the coming days.
An increase in interest rate leads to an increase in the borrowing cost for consumers, which, in turn, affects economic growth. A slowdown in the economy brings down the demand for commodities such as crude oil in the global market.
Meanwhile, the weekly petroleum status report by the US EIA (Energy Information Administration) for the week ending June 16, showed a decline in the crude oil inventories in that country. US commercial crude oil inventories (excluding those in the strategic petroleum reserve) decreased by 3.8 million barrels from the previous week.
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US crude oil imports averaged 6.2 million barrels a day last week, a decrease of 2,20,000 barrels a day from the previous week.
June zinc futures were trading at ₹214.45 on MCX in the initial trading hour of Friday morning against the previous close of ₹216.10, down by 0.76 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), July guar gum contracts were trading at ₹10,575 in the initial trading hour of Friday morning against the previous close of ₹10,452, up by 1.18 per cent.
August turmeric (farmer polished) futures were trading at ₹9,480 on NCDEX in the initial trading hour of Friday morning against the previous close of ₹9,424, up by 0.59 per cent.