Oil and natural gas daily review (February 10, 2014)
February 10, 2014, Monday, 06:16 GMT | 01:16 EST | 10:46 IST | 13:16 SGT
Nymex crude oil prices increased around 2.5 percent in the last week on the back of expectations of rise in demand for the fuel after decline in US unemployment rate coupled with rise in demand for the distillate. Further, weakness in the DX coupled with positive market sentiments in later part of the week supported an upside in the prices.
Additionally, restart of crude production from Libya after the end of protest that had shut the pipeline could not add downside pressure to the prices. Crude oil prices touched a weekly high of $100.24/bbl and closed at $99.90/bbl in the last trading session of the week.
On the domestic bourses, prices slipped marginally around 0.1 percent due to Rupee appreciation and closed at Rs.6161/bbl of Friday after touching a weekly high of Rs.6048/bbl.
Nymex natural gas prices dropped by more than 3 percent in the prior week on the back of estimates of warm weather conditions by end of current month which will lead to decline in demand for the commodity.
However, weakness in the DX coupled with decline in gas inventories could not provide respite to fall in the prices. Gas prices touched a weekly low of $4.739/mmbtu and closed at $4.765/mmbtu in the last trade of the prior week.
On the domestic front, prices plunged by more than 6 percent due to appreciation in the Rupee and closed at Rs.300/mmbtu on Friday after touching a weekly low of Rs.295.6/mmbtu.
From the intra-day perspective, we expect oil prices to trade higher on account of expectations of rise in demand for the fuel after decline in employment data from the US in the last week. Further, weakness in the DX coupled with upbeat market sentiments will support an upside in the prices. However, sharp upside in the prices will be capped or reversal can be seen due to restart of crude production in Libya.
In the Indian markets, Rupee appreciation will restrict sharp upside movement or even reversal in the prices.