Oil and natural gas daily review (January 16, 2014)
January 16, 2014, Thursday, 06:06 GMT | 01:06 EST | 11:36 IST | 14:06 SGT
Nymex crude oil prices gained around 1.7 percent yesterday on the back of more than expected decline in US crude oil inventories which is at the lowest level in last 22 months. Crude supplies have slipped around 41.2 million barrels since 22nd Nov'13 the largest seven week data since 1982 supported an upside in the prices. Further, rise in total fuel consumption by 3.5 percent to 18.9 million barrels a day, the first rise in last four weeks coupled with estimates of rise in demand for the fuel after World Bank raising the global growth forecast acted as a positive factor.
However, sharp upside in the prices was restricted due to increase in US crude production which rose by 14,000 barrels a day to 8.16 million barrels the most since 1988. Additionally, decline in refinery operating capacity by 2.3 percent to 90 percent capped sharp gains in the prices. Crude oil prices touched an intra-day high of $94.64/bbl and closed at $94.35/bbl in yesterday's trading session.
On the domestic bourses, prices rose by more than 2 percent due to Rupee depreciation and closed at Rs.5823/bbl after touching an intraday high of Rs.5829/bbl on Wednesday.
EIA Inventories Data
As per the US Energy Department (EIA) report, US crude oil inventories declined more than expected by 7.7 million barrels to 350.20 million barrels for the week ending on 10th January 2014.
Gasoline stocks gained more than estimated by 6.2 million barrels to 223.10 million barrels and whereas distillate stockpiles plunged by 1.02 million barrels to 124.0 million barrels for the last week.
From the intra-day perspective, we expect crude oil prices to trade higher on the back of sharp decline in US crude oil inventories in yesterday's trade. Further, expectations of rise in demand for the fuel after World Bank raised the global growth forecast for 2014 and 2015 will support an upside in the prices. Additionally, upbeat market sentiments will act as a positive factor. However, sharp upside in the prices will be capped due to rise in the US crude production at highest level since 1988. Also, decline in refinery capacity along with strength in the DX will restrict positive movement in the prices. In the Indian markets, upside in the prices will be prevented due to Rupee appreciation.