Oil and natural gas daily review (January 07, 2014)
January 7, 2014, Tuesday, 07:41 GMT | 02:41 EST | 12:11 IST | 14:41 SGT
While the Nymex crude oil contract closed higher by 0.3 percent on Monday, gains in the commodity were restricted on account of expectations of rise in inventories of gasoline and distillates.
For the last week, data is likely to show a rise of 2 million barrels in distillate inventories, while gasoline stocks are expected to rise by 2.5 million barrels.
This increase in inventories of oil products amid a peak winter season period is acting as a negative factor on oil prices. Additionally, data released from the US yesterday showed a decline in Services PMI and this too affected market sentiment to a great extent.
Natural gas futures contract on the Nymex declined 0.5 percent to close at $4.30/mmbtu. Prices came under pressure as weather in the US is not likely to be supportive for natural gas demand.
In the Indian markets, the decline in prices was sharper as the commodity fell about 1.7 percent to close at Rs268.5/mmbtu.
In intraday trade, we expect crude oil prices to trade lower as expectations of rise in gasoline and distillate stocks will continue to be bearish for prices amid a usually peak demand season. With no major economic data that can have a direct impact on crude oil prices today, we expect the commodity to take cues from the inventory and demand scenario in the US, which in the current scenario is bearish for prices.