Commodities

Oil and natural gas daily review (January 07, 2013)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices increased around 2.5 percent in the last week on the back of sharp decline in US crude oil inventories. Additionally, favorable data like manufacturing and non - manufacturing activity coupled with more than forecasted change in non-farm employment led to expectations of rise in demand for the fuel.

However, sharp upside in the prices was capped as a result of strength in the DX. Crude oil prices touched a weekly high of $93.87/bbl and closed at $93.09/bbl in the last trading session of the week. On the domestic bourses, prices rose around 2 percent on account of depreciation in the Indian Rupee and closed at Rs.5,113/bbl on Friday after touching a high of Rs.5,122/bbl in the last week.

EIA Inventories Data

As per the US Energy Department (EIA) report last night, US crude oil inventories declined more than expected by 11.1 million barrels to 359.90 million barrels for the week ending on 28th December 2012. Gasoline stocks rose by 2.57 million barrels to 225.70 million barrels and whereas distillate stockpiles gained by 4.57 million barrels to 124.0 million barrels for the last week.

Natural Gas

EIA Inventories Data

US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory declined more than expected by 135 billion cubic feet (bcf) which stood at 3.517 trillion cubic feet for the week ending on 28th December 2012.

Outlook

In the intra-day we expect crude oil prices to trade with a bearish note due to mixed global market sentiments along with strength in the DX. Worries amongst the market participants over US debt ceiling and spending cuts resolution are likely to exert downside pressure on the crude prices. However, unexpected decline in the crude oil inventories is expected to cushion fall in the prices. In the domestic markets, appreciation in the rupee is expected to exert downside pressure in MCX Crude oil prices.