Oil and natural gas daily review (January 09, 2014)
January 9, 2014, Thursday, 16:58 GMT | 11:58 EST | 22:28 IST | 00:58 SGT
Nymex crude oil prices declined around 1.4 percent yesterday on the back of more than expected rise in US gasoline and distillate inventories. Further, fall in total products demand by 782,000 barrels a day to 18.2 million barrels the least since 7th June’13 coupled with drop in gasoline consumption to 8.27 million barrels a day lowest in last one year exerted downside pressure on the prices.
Additionally, decline in refinery capacity by 0.1 percent which operated at 92.3 percent, rise in US crude production to 8.15 million barrels a day the most since September 1988 along with strength in the DX acted as a negative factor. Crude oil prices touched an intra-day low of $92.26/bbl and closed at $92.33/bbl in yesterday’s trading session.
On the domestic bourses, prices fell by 1.2 percent and closed at Rs.5787/bbl after touching an intra-day low of Rs.5778/bbl on Wednesday.
EIA Inventories Data
As per the US Energy Department (EIA) report, US crude oil inventories declined more than expected by 2.7 million barrels to 357.90 million barrels for the week ending on 3rd January 2014.
Gasoline stocks gained more than estimated by 6.24 million barrels to 227.0 million barrels and whereas distillate stockpiles surged sharply by 5.83 million barrels to 125.0 million barrels for the last week.
EIA Inventories Forecast
US Energy Information Administration (EIA) is scheduled to release its weekly inventories and US natural gas inventory are expected to decline by 147 billion cubic feet (bcf) for the week ending on 3rd January 2014.
From the intra-day perspective, we expect crude oil prices to trade lower on the back of weak market sentiments due to concerns of QE tapering by the Federal Reserve coupled with strength in the DX. Additionally, more than forecasted rise in distillate and gasoline inventories by EIA and API during the week will exert downside pressure on the prices. Further, decline in overall demand along with gasoline consumption at lowest level in last one year acted as a negative factor. Also, rise in the US crude production which is at the highest level since September 1988 will continue with negative movement in the oil prices. In the Indian markets, Rupee depreciation will prevent sharp downside in the prices.