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Commodities Energy

Oil and natural gas daily review (August 11, 2014)

August 11, 2014, Monday, 05:01 GMT | 01:01 EST | 09:31 IST | 12:01 SGT
Contributed by Angel Broking


Crude Oil

At the start of last week, oil prices climbed on both sides of the Atlantic investors shifted their attention from worries about swelling supplies to concerns about ongoing violence in Libya and other global hotspots.

Buyers were lured back by fears of growing oil supply disruptions due to escalating violence in Libya and Iraq, both major producers, and the crisis in eastern Ukraine, where Russian-backed separatists are fighting Ukrainian government troops.

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.

Over the course of last week, ample supplies in the US led the WTI contract to fall close to the lowest in six months while Brent prices traded at nine month lows.

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.

In the international markets, crude oil prices declined marginally by around 0.23 percent and closed at $97.65/bbl.

On the domestic bourses, prices traded flat and gained marginally by around 0.02 percent in the last week and closed at Rs.5975/bbl.


Outlook

On an intraday basis, we expect crude oil prices to trade sideways as escalating tensions in Iraq coupled with ease of geo-political tensions between Russia and Ukraine will lead to decline in 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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