Oil and natural gas daily review (January 10, 2014)
January 10, 2014, Friday, 12:38 GMT | 07:38 EST | 18:08 IST | 20:38 SGT
A comfortable supply-side scenario and signs of slowing demand in the US amid the peak winter demand season are acting as bearish signals for crude oil prices.
Crude oil stocks in the US are near a 30-year seasonal high and thus suggest that the world’s largest consumer of crude oil is witnessing a situation of ample supply, thus deteriorating prospects of rise in prices even if demand recovers.
In intraday trade, prices on the MCX fell by around 0.7 percent to close at $91.7/oz. On the domestic bourses, prices on the MCX declined 1.4 percent to close at Rs.5705/bbl. Depreciation in the Rupee supported further gains in the domestic markets.
Natural gas prices fell sharply on Thursday, losing about 4 percent on the Nymex and around 4.5 percent on the MCX. Prices came under pressure and fell the most in eight months as there are expectations of a warmer weather in the US, which in turn is negative from the demand perspective for natural gas.
While the near-month natural gas contract on the Nymex closed at $4.026/mmbtu yesterday, during the trade, it slipped to a low of $3.999/mmbtu.
Crude oil prices are expected to trade on a negative note today as supply-side fundamentals are not supportive in the midst of slowdown in US demand.
Natural gas prices too are likely to continue to witness downside pressure on account of forecasts of unsupportive weather conditions, which could affect demand for the commodity.