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Commodities Energy

Oil and natural gas daily review (February 28, 2014)

February 28, 2014, Friday, 05:23 GMT | 00:23 EST | 09:53 IST | 12:23 SGT
Contributed by Angel Broking


Crude Oil

Nymex crude oil prices declined around 0.2 percent yesterday on the back of expectations that tight lending in China may hamper the economic growth in world’s second largest economy thereby affecting the demand for the commodity. Further, unrest in Ukraine after gunmen occupied the government building exerted downside pressure in the crude oil prices.

However, sharp downside in the prices was prevented due to declining inventories at Cushing Oklahoma. Further, weakness in the DX also prevented sharp downside in the prices. Crude oil prices touched an intra-day low of $101.75/bbl and closed at $102.40/bbl in yesterday’s trading session.

In the Indian markets, prices fell by 0.8 percent and closed at Rs.6348/bbl after touching an intra-day low of Rs.6331/bbl on Thursday.


Natural Gas

Nymex natural gas declined by more than 4 percent yesterday due to less than expected fall in US natural gas inventories. Further, expectations of mild winter weather conditions exerted downside pressure on the prices.

Weakness in the DX failed to provide respite to the prices. Gas prices touched an intra-day low of $4.441/mmbtu and closed at $4.473/mmbtu in yesterday’s trade.

On the domestic bourses, prices slipped around 6 percent and closed at Rs.283.2/mmbtu after touching an intra-day low of Rs.277.30/mmbtu on Thursday.

EIA Inventories Data

US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory declined less than expected by 95 billion cubic feet (bcf) which stood at 1.348 trillion cubic feet for the week ending on 21st February 2014.


Outlook

From the intra-day perspective, we expect crude oil prices to trade on a mixed note on the back of upbeat market sentiments coupled with weakness in the DX will support an upside in the prices. Further, declining inventories at Cushing Oklahoma hub will act as a positive factor. While on the other hand, unrest in Ukraine will exert downside pressure on the prices. Additionally, forecast for slow economic growth from the US along with statement from US Federal Reserve Chairperson yesterday to continue with QE tapering will act as a negative factor. In the Indian markets, movement in the Rupee will provide direction to the prices.