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Commodities Energy

Oil and natural gas daily review (December 18, 2013)

December 18, 2013, Wednesday, 06:38 GMT | 01:38 EST | 11:08 IST | 13:38 SGT
Contributed by Angel Broking


Crude Oil

Nymex crude oil prices declined around 0.3 percent yesterday on the back of estimates of decline in demand for the fuel after concerns regarding the QE tapering by the Federal Reserve in its meeting today. Additionally, strength in the DX and weak market sentiments acted as a negative factor.

However, sharp downside in prices was cushioned due to decline in API crude oil inventories along with favorable economic sentiments data from the Euro Zone. Oil prices touched an intra-day low of $97.0/bbl and closed at $97.20/bbl in yesterday’s trading session.

On the domestic bourses, prices slipped around 0.4 percent and closed at Rs.6003/bbl after touching an intra-day low of Rs.5994/bbl on Tuesday.

API Inventories Data

As per the American Petroleum Institute (API) report last night, US crude oil inventories declined by 2.5 million barrels to 367.80 million barrels for the week ending on 13th December 2013.

Gasoline inventories dropped by 481,000 barrels to 221.98 million barrels and whereas distillate inventories fell by 434,000 barrels to 115.10 million barrels for the same week.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 9:00pm IST and US crude oil inventories is expected to fall by 2.3 million barrels for the week ending on 13th December 2013.

Gasoline stocks are expected to gain by 1.9 million barrels whereas distillate inventories are expected to surge by 0.4 million barrels for the same period.


Outlook

From the intra-day perspective, we expect crude oil prices to trade on a mixed note on the back of estimates of decline in US crude oil inventories will support an upside in the prices. Further, fall in API inventories in yesterday’s trade will act as a positive factor. While on the other hand, mixed market sentiments coupled with strength in the DX will exert downside pressure on the prices. Additionally, investors will remain caution ahead of the US Federal Reserve meeting today which will act as a negative factor. In the Indian markets, depreciation in the Rupee will cushion sharp downside in the prices.