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Crude oil gets a boost from US GDP numbers

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Oil prices rose Friday morning after better-than-expected U.S. GDP data for the fourth quarter of 2022.

At 10:01 am on Friday, March Brent crude futures were up 0.47% at $87.88 and March WTI crude futures were up 0.46% at $81.38.

Crude oil futures for February are trading at INR 6,657 on the Multi Commodity Exchange (MCX), up 1.90% from the previous close of INR 6,533. 1.63 percent.

Offset by decrease

According to preliminary estimates released by the U.S. Bureau of Economic Analysis (BEA), U.S. real Gross Domestic Product (GDP) grew at an annualized rate of 2.9% in Q4 2022. We expected it to be 2.6%. In fact, real GDP increased by 3.2% in the third quarter of 2022.

The BEA estimates that real GDP growth reflects increases in private inventory investment, consumer spending, federal spending, state and local government spending, and non-residential capital investment, while residential capital investment and exports increase. partially offset by declines.

The increase in private inventory investment was led by manufacturing (primarily oil, coal products and chemicals), mining, utilities and construction (led by utilities). Growth in consumer spending reflects growth in both services and goods. In the services sector, healthcare, housing and utilities, and ‘other’ services (especially personal care services) led the increase. Among goods, automobiles and parts dominated.

Among federal spending, the increase was led by nondefense spending. The increase in state and local government spending primarily reflects increased compensation for state and local government employees. In non-residential capital spending, an increase in intellectual property products was partially offset by a decline in capital spending.

The slowdown in real GDP in the fourth quarter mainly reflects weaker exports, as well as slower non-residential capital spending, state and local government spending, and consumer spending, the BEA estimates. These movements were partially offset by increased private inventory investment, accelerated federal spending, and a slight decline in residential fixed investment. Imports declined less in the fourth quarter than in the third, he said.

The market now expects the US Fed to resort to a 25 basis point rate hike at its next meeting. Such a move would be positive for the market.

Another factor boosting market sentiment was the decline in Covid cases in China.

Citing the Chinese Center for Disease Control and Prevention, a Reuters report said China’s severe Covid cases were down 72% from its peak earlier this month, while daily patient mortality in hospitals was down 79% from its peak. said.

Visits to fever clinics decreased by 96.2% from a peak of 2,867,000 on 22nd December to 110,000 on 23rd January.

China recently eased strict Covid control measures to boost its economy. As China is an important consumer, the decline in Covid cases will help boost sentiment in the oil market.

Daniyah, Jeera Gain

Natural Gas futures for February were trading at Rs 239.70 on MCX during the first trading hours on Friday morning.

On the National Commodities and Derivatives Exchange (NCDEX), the April dhaniya contract was trading at INR 8,180 in the first trading hour, up 1.01% from its previous closing price of INR 8,098.

Zira’s March futures were trading at Rs 31,850 on NCDEX, up 1.16% from the previous close to Rs 31,485.

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