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Commodities Energy

Oil and natural gas daily review (December 12, 2013)

December 12, 2013, Thursday, 05:25 GMT | 00:25 EST | 09:55 IST | 12:25 SGT
Contributed by Angel Broking


Crude Oil

Nymex crude oil prices declined by more than 1 percent in yesterday’s trade on the back of more than expected rise in the US distillate and gasoline inventories. Further, estimates of decline in demand for the fuel due to concerns of QE tapering by the Federal Reserve in its meeting next week exerted downside pressure on the prices.

Additionally, sharp decline in US crude oil inventories along with forecast for rise in crude oil demand in 2014 by International Energy Agency (IEA) could not help support prices. Oil prices touched an intra-day low of $97.2/bbl and closed at $97.44/bbl in yesterday’s trading session.

On the domestic bourses, prices trading on a flat note and gained marginally due to Rupee depreciation and closed at Rs.6014/bbl after touching an intra-day high of Rs.6059/bbl on Wednesday.

EIA Inventories Data

As per the US Energy Department (EIA) report, US crude oil inventories declined more than expected by 10.6 million barrels to 375.20 million barrels for the week ending on 6th December 2013. Gasoline stocks gained more than estimated around 6.7 million barrels to 219.15 million barrels and whereas distillate stockpiles rose by 4.5 million barrels to 118.07 million barrels for the last week.


Natural Gas

EIA Inventories Forecast

US Energy Information Administration (EIA) is scheduled to release its weekly inventories and US natural gas inventory are expected to decline by 85 billion cubic feet (bcf) for the week ending on 6th December 2013.


Outlook

From the intra-day perspective, we expect crude oil prices to trade on a mixed note on the back of more than forecasted rise in US gasoline and distillate inventories data in yesterday’s trade. Further, weak market sentiments on account of concerns of QE tapering by the Federal Reserve coupled with strength in the DX will add downside pressure on the prices. While on the other hand, sharp decline in US crude oil inventories yesterday along with estimates of rise in demand for the crude in 2014 by IEA will cushion sharp downside or even reversal in the prices. Additionally, anticipation for rise in industrial production data from the Euro Zone and favorable retail sales data from the US in the evening session can act as a positive factor. In the Indian markets, depreciation in the Rupee will support an upside in the prices.