Oil and natural gas daily review (February 13, 2014)
February 13, 2014, Thursday, 05:25 GMT | 00:25 EST | 09:55 IST | 12:25 SGT
Nymex crude oil prices increased around 0.4 percent yesterday on the back of sharp decline of inventories by 2.67 million barrels at Cushing, Oklahoma. The decline in the inventories was at the highest level in last four months due to southern leg of TransCanada Corporation Keystone pipeline moved oil to the Gulf Coast. Further, increase of Chinese crude oil imports by 12 percent from a year ago supported an upside in the prices. China imported around 6.66 million barrels a day in Jan’14 which is 5.2 percent more than 6.33 million barrels a day in Dec’13.
However, sharp upside in the prices was prevented due to decline in oil demand by 569,000 barrels a day to 18.5 million barrels for the week ending on 7th Feb’14. Additionally, rise in the US crude oil production by 88,000 barrels a day to 8.13 million barrels for the same week coupled with less than expected decline in US distillate inventories cushioned sharp upside in the prices. Crude oil prices touched an intra-day high of $101.38/bbl and closed at $100.37/bbl in yesterday’s trade.
On the domestic bourses, prices gained by 0.1 percent and closed at Rs.6220/bbl after touching an intra-day high of Rs.6280/bbl on Wednesday. Rupee appreciation capped sharp gains in the prices on the MCX.
EIA Inventories Data
As per the US Energy Department (EIA) report, US crude oil inventories increased more than expected by 3.27 million barrels to 361.40 million barrels for the week ending on 7th February 2014. Gasoline stocks slipped by 1.85 million barrels to 233.10 million barrels and whereas distillate stockpiles plunged less than forecasted by 731,000 barrels to 113.10 million barrels for the last week.
From the intra-day perspective, we expect crude oil prices to trade on a mixed note on the back of declining trend in inventories at Cushing, Oklahoma hub which was at the highest level in last four months will support an upside in the prices. Further, increase in Chinese crude imports in yesterday’s trade along with weakness in the DX will act as a positive factor. While on the other hand, decline in oil demand and increase in the crude oil production from the US will exert downside pressure on the prices. Additionally, more than expected rise in US crude oil inventories and less than estimated decline in US distillate inventories yesterday will act as a negative factor. Also, forecast for decline in core retail sales and retail sales data from the US in the evening session will continue with downside movement in the oil prices. In the Indian markets, Rupee appreciation will cap sharp gains or exert downside pressure on the prices.