Commodities

Oil and natural gas daily review (August 31, 2012)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices declined around 0.9 percent yesterday taking cues from resume of refineries operation in Gulf of Mexico after Tropical Storm Isaac has passed away. Additionally, strength in the DX has also added downside pressure on the crude oil prices.

Crude prices touched an intra-day low of $93.95/bbl and closed at $94.60/bbl in yesterday's trading session. On the domestic bourses, prices declined by 0.7 percent and closed at Rs.5,276/bbl after touching an intra-day low of Rs.5257/bbl on Thursday.

Natural Gas

Nymex natural gas prices gained by 2.5 percent yesterday on account of month end contract expiring. However, further upside in the prices was restricted on the back of more than expected increase in US natural gas inventories coupled with strength in the DX.

Natural gas prices touched an intra-day high of $2.767/mmbtu and closed at $2.76/mmbtu on Thursday. In the Indian markets prices gained by 2.4 percent and closed at Rs.154/mmbtu after touching an intra-day high of Rs.155/mmbtu in yesterday's trading session.

EIA Inventories Data

US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory has increased more than the expectations by 66 billion cubic feet (bcf) which stood at 3.374 trillion cubic feet for the week ending on 24th August 2012.

Outlook

We expect crude oil prices to trade with bearish tone taking cues from weak global market sentiments along with strength in the DX. Additionally, operations in the refineries to resume shortly after the Hurricane Isaac passed over from the Gulf of Mexico region adding further downside pressure to the crude oil prices.