Commodities

Oil and natural gas daily review (February 08, 2013)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices declined around 0.8 percent yesterday taking cues from European Central Bank President Mario Draghi statement that strength in the Euro as a currency, can affect the economic growth in the region which led to expectations of fall in demand for the fuel. Additionally, decline in total petroleum demand in US by 3.4 percent to 18.1million barrels a day in last week, fall in gasoline consumption by 1 percent to 8.42 million barrels a day for the week ending on 1st February 2013 along with strength in the DX also exerted downside pressure on the crude oil prices.

However, sharp downside in the crude prices was cushioned on account of US jobless claims coming on a favorable note. Oil prices touched an intra-day low of $95.54/bbl and closed at $95.83/bbl in yesterday's trading session.

On the domestic bourses, prices declined by 0.1 percent and closed at Rs.5,133/bbl after touching an intra-day low of Rs.5,121/bbl on Thursday. However, depreciation in the Indian Rupee prevented further fall in the crude oil prices.

Natural gas

Nymex natural gas prices declined by more than 4 percent yesterday on the back of less than expected decline in US natural gas inventories. Additionally, strength in the DX also added downside pressure on the prices.

However, sharp further downside in the prices was prevented on account of forecast for cooler winter weather ahead. Gas prices touched an intra-day low of $3.282/mmbtu and closed at $178.5/mmbtu on Thursday.

On the domestic front, prices declined around 3 percent and closed at Rs.178.5/mmbtu after touching an intra-day low of Rs.177.6/mmbtu in yesterday's trading session. Depreciation in the Indian Rupee restricted fall in the gas prices.

EIA Inventories Data

US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory declined less than expected by 118 billion cubic feet (bcf) which stood at 2.864 trillion cubic feet for the week ending on 1st February 2013.

Outlook

In today's session, we expect crude oil prices to trade lower on the back of weak global market sentiments and as Saudi Arabia kept the production output steady near 9 million barrels to maintain the OPEC output. Thus limited concerns over the supplies are expected to keep the crude oil prices under pressure. Depreciation in the Indian Rupee will support an upside in the crude oil prices on the MCX.