Commodities

Oil and natural gas daily review (January 21, 2013)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices rose by 2.1 percent in the last week taking cues from unexpected decline in US crude oil inventories coupled with rise in the petroleum consumption and cut in production by the Organization of Petroleum Exporting Countries (OPEC).

However, strength in the DX capped sharp gains in the prices along with weak global market sentiments. Crude oil prices touched a weekly high of $96.04/bbl and closed at $95.56/bbl in the last trading session of the week.

On the domestic bourses, prices increased 0.6 percent and closed at Rs.5, 151/bbl on Friday after touching a weekly high of Rs.5,188/bbl in the last week. Appreciation in the Indian Rupee restricted sharp gains in the prices on the MCX.

Natural Gas

On a weekly basis, Nymex natural gas prices gained by 5.7 percent on the back of more than expected decline in US natural gas inventories. Additionally, expectations of cooler winter weather also supported an upside in the gas prices.

However, strength in the DX prevented sharp upside in the prices. Gas prices touched a weekly high of $3.579/mmbtu and closed at $3.572/mmbtu in the last trading session.

On the domestic front, prices increased around 3 percent as appreciation in the Indian Rupee capped sharp gains and closed at Rs.191.40/mmbtu on Friday after touching a high of Rs.191.8/mmbtu in the last week.

Outlook

In the intra-day, we expect crude oil prices to trade with upward bias taking cues from positive data from the China along with weakness in the DX. Signs of progress amongst US policy makers over the debt ceiling issue are also expected to support an upside in the crude oil prices. In the domestic market, appreciation in the rupee is expected to exert downside pressure on the crude oil prices.