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Commodities Energy

Oil and natural gas daily review (August 06, 2014)

August 6, 2014, Wednesday, 06:15 GMT | 02:15 EST | 10:45 IST | 13:15 SGT
Contributed by Angel Broking


Crude Oil

Oil prices declined on Tuesday on ample supplies in Europe and North America outweighing fears of violence in the Middle East and North Africa could disrupt production. Worries about geo-political tensions helped short rebound in crude oil prices, the market resumed its downward trend as traders and investors grew more nervous about seasonal weak demand and poor refinery margins.

Libyan oil output has dropped to around 450,000 barrels per day (bpd) from 500,000 bpd last week. Yet the state-run National Oil Corp says oilfields are secure despite prolonged clashes between rival militias in the capital, Tripoli.

API inventory update

The API released its weekly inventories report last night and US crude oil inventories declined by 5.5 million barrels for the week ending on 1st August 2014. Gasoline stocks declined by 3.6 million barrels whereas distillate inventories fell by 0.544 million barrels for the same time period.

EIA inventory forecast

The EIA is scheduled to release its weekly inventories report tonight at 8 PM IST and US crude oil inventories is expected to decline by 1.7 million barrels for the week ending on 1st Aug 2014. Gasoline stocks are expected to increase by 0.3 million barrels, whereas distillate inventories are expected to increase 0.9 million barrels for the same time period.


Outlook

On an intraday basis, we expect crude prices to trade on a negative note on ample supplies in the Europe and North America. Although, escalation of geo-political tensions has been bothering crude markets there has been no real threat of supplies. On the other hand, there is no disturbance to the Libyan supplies despite the violence in the country.

Meanwhile, the crude inventory report due tonight will decide further trajectory of crude prices in today’s session.

On the MCX, crude prices are expected to trade on a negative note taking cues from weak international markets.

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