Commodities

Oil and natural gas daily review (January 11, 2013)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices increased around 0.8 percent yesterday taking cues from increase in Chinese exports which is the world's second largest consumer of crude oil along with statement from European Central Bank (ECB) President Mario Draghi that economy will gradually start to recover.

Additionally, weakness in the DX also supported an upside in the crude prices. Crude oil prices touched an intra-day high of $94.70/bbl and closed at $93.91/bbl in yesterday's trading session.

On the domestic bourses, prices gained by 0.5 percent and closed at Rs.5,132/bbl after touching an intra-day high of Rs.5,175/bbl on Thursday. However, appreciation in the Indian Rupee capped sharp gains in the prices on the MCX.

News:

Saudi Arabia, which the biggest crude oil producer in the Organization of Petroleum Exporting Countries (OPEC) has cut its production by 465,000 barrels to 9.025 million barrels a day in the month of December. The decline in production of 4.9 percent is the largest monthly drop since November 2008. The country and OPEC cartel has decided to reduce supplies as a result of rising US output and recovering shipments from Iraq which threaten to oversupply the global oil market along with global recession.

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 201 billion cubic feet (bcf) which stood at 3.316 trillion cubic feet for the week ending on 4th January 2012.

Outlook

In the intra-day we expect crude oil prices to trade higher as OPEC cuts its output along with mixed global market sentiments. However, strength in the DX is expected to restrict sharp gains in the crude oil prices. In the domestic markets, depreciation in the rupee is expected to act as a positive factor for the upside in the MCX Crude oil prices.