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Commodities Energy

Oil and natural gas daily review (February 24, 2014)

February 24, 2014, Monday, 06:42 GMT | 01:42 EST | 11:12 IST | 13:42 SGT
Contributed by Angel Broking


Crude Oil

Nymex crude oil prices jumped around 2 percent in the last week taking cues from to declining inventories at Cushing, Oklahoma which has slipped to 35.9 million barrels lowest since 25th Oct’13. Overall supplies have dropped around 5.96 million barrels in last three weeks. Further, supplies concerns from Venezuela after unrest in the country acted as a positive factor.

However, sharp upside in the prices was prevented due to rise in the US crude oil inventories which has gained for the fifth consecutive week ending on 14th Feb’14. Further, drop in gasoline demand by 3.5 percent to 8.03 million barrels a day along with decline in consumption of distillate by 1.4 percent to 3.62 million barrels a day in last week capped sharp gains in the prices. Crude oil prices touched a weekly high of $103.80/bbl and closed at $102.2/bbl in last trading session of the week.

On the domestic bourses, prices rose by 2.6 percent due to Rupee depreciation and closed at Rs.6359/bbl on Friday after touching a weekly high of Rs.6437/bbl.


Natural Gas

On a weekly basis, Nymex natural gas prices rose by whopping 20 percent on the back of expectations of cool weather conditions will lead to increase in demand for the commodity. Further, decline in US gas inventories supported an upside in the prices.

Even strength in the DX could not add downside pressure to the prices. Gas prices touched a weekly high of $6.4/mmbtu and closed at $6.223/mmbtu in the last trade of the previous week.

In the Indian markets, prices gained by 16.5 percent and closed at Rs.378/mmbtu after touching a high of Rs.395.50/mmbtu in the prior week.


Outlook

From the intra-day perspective, we expect crude oil prices to trade on a positive note on the back of declining inventories at Cushing. Further, expectations of rise in demand for the commodity after cool weather conditions in the US will support an upside in the prices. Additionally, forecast for favorable business climate data from the Germany will act as a positive factor. However, decline in gasoline demand and fall in distillate consumption coupled with weak market sentiments and strength in the DX will cap sharp gains in the prices. In the Indian markets, Rupee depreciation will support an upside in the prices.