Commodities

Oil and natural gas daily review (February 25, 2013)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices declined by 2.8 percent in the last week taking cues from more than expected rise in the US crude oil inventories coupled with negative statement from the US Federal Reserve that central bank may stop bond buying program before the expected deadline.

Additionally, unfavorable economic data from the US and Euro Zone coupled with strength in the DX also exerted downside pressure on the crude prices. Crude oil prices touched a weekly low of $92.44/bbl and closed at $93.13/bbl in the last trading session of the week.

On the domestic bourses, prices declined by 2.5 percent and closed at Rs.5,069/bbl on Friday after touching a low of Rs.5,041/bbl in the last week.

Natural Gas

On a weekly basis, Nymex natural gas prices declined around 3.7 percent on the back of expectations of warmer winter weather conditions which will lead to fall in demand for the fuel. Further, strength in the DX also exerted downside pressure on the gas prices.

However, sharp downside in the gas prices was cushioned as a result of more than forecasted decline in US natural gas inventories. Gas prices touched low of $3.135/mmbtu in the last week and closed at $3.278/mmbtu on Friday.

On the domestic front, prices fell by 3.3 percent as a result of appreciation in the Indian Rupee and closed at Rs.177.7/mmbtu on 22nd February, 2013 after touching a weekly low of Rs.171.1/mmbtu.

Outlook

In today's session, we expect crude oil prices to trade with negative bias due to expectations of international talks on Iran's nuclear program. Further, decline in China's manufacturing PMI will also led to forecast for fall in demand for the fuel which will exert downside pressure on the prices. Sharp downside in the prices will be cushioned on account of weakness in the DX coupled with upbeat global market sentiments. Appreciation in the Indian Rupee will act as a negative factor for crude prices on the MCX.