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Commodities Energy

Oil and natural gas daily review (February 25, 2014)

February 25, 2014, Tuesday, 07:02 GMT | 02:02 EST | 12:32 IST | 15:02 SGT
Contributed by Angel Broking


Crude Oil

Nymex crude oil prices increased around 0.6 percent yesterday taking cues from 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, rise in risk appetite in market sentiments led to expectations of increase in demand for the fuel which supported an upside in the prices.

Additionally, weakness in the DX will act as a positive factor. Crude oil prices touched an intra-day high of $103.45/bbl and closed at $102.80/bbl in yesterday’s trading session.

On the domestic bourses, prices rose by 0.6 percent and closed at Rs.6400/bbl after touching an intra-day high of Rs.6421/bbl on Monday.

API Inventories Forecast

The American Petroleum Institute (API) is scheduled to release its weekly inventories today and US crude oil inventories are expected to gain by 1.4 million barrels for the week ending on 21st February 2014.

Gasoline stocks are expected to decline by 1.5 million barrels and distillate inventories are expected to plunge by 1.5 million barrels for the same 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 boosted demand in the US will support an upside in the prices. Additionally, forecast for decline in distillate and gasoline inventories from API will act as a positive factor. Also, upbeat market sentiments along with weakness in the DX will continue with positive movement in the prices. However, expectations of rise in API crude oil inventories coupled with forecast for decline in consumer confidence data from the US in the evening session will cap sharp gains in the prices.

In the Indian markets, Rupee appreciation will cap sharp upside or even reversal in the prices.

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