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Commodities Energy

Oil and natural gas daily review (August 08, 2014)

August 8, 2014, Friday, 06:46 GMT | 01:46 EST | 10:16 IST | 12:46 SGT
Contributed by Angel Broking


Crude Oil

Crude oil prices traded positive on Thursday after reports the United States was considering airstrikes on advancing Islamic militants in Iraq revived concerns about supply disruptions from OPEC's No. 2 oil producer. However, White House spokesman Josh Earnest would not confirm that airstrikes were being considered. "There are no American military solutions to the problems in Iraq," he said.

On the contrary, ample global supplies were still pressuring oil prices, noting that oil supplies from Iraq had not yet been interrupted. Meanwhile, refining issues in the United States, including the four-week shut-down of a refinery in Coffeyville, Kansas, are weighing on U.S. crude, ahead of the refinery turnaround season in autumn, characterized by typically weaker demand.

On the MCX, crude prices gained by 0.5 percent taking cues from strong international markets and rupee weakness closing the session at Rs.5987/bbl.

Natural gas inventory update

AS per the report released by the EIA, utilities added 82 Bcf of natural gas. Natural gas prices on the NYMEX reacted to the reports and declined by around 2 percent closing at $3.88/MMbtu. On the MCX, Natural gas prices declined by around 1.44 percent taking cues from weak international markets and closed at Rs.238.80/Mmbtu.


Outlook

On an intraday basis, we expect crude oil prices to trade sideways as escalating tensions in Iraq coupled with heightening geo-political tensions between Russia and Ukraine will lift crude prices. On the other hand, ample supplies in the US coupled with refining issue in the US affecting demand will exert downside pressure on prices.

On the MCX, crude prices are expected to trade sideways following mix set of factors in the international markets while rupee weakness might lift crude prices in the domestic markets.

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