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Commodities Energy

Oil and natural gas daily review (January 23, 2014)

January 23, 2014, Thursday, 07:14 GMT | 02:14 EST | 11:44 IST | 14:14 SGT
Contributed by Angel Broking

Crude Oil
Nymex crude oil prices gained around 1.8 percent yesterday on the back of more than expected decline in API distillate inventories as low temperatures bolstered heating demand. Further, statement from TransCanada Corp that a leg of the Keystone XL pipeline has started delivering crude to the Gulf Coast supported an upside in the prices. Additionally, International Energy Agency (IEA) raising the forecast for global oil demand by 1.3 million barrels a day to 92.5 million barrels for 2014 acted as a positive factor. Crude oil prices touched an intra-day high of $96.89/bbl and closed at $96.73/bbl in yesterday’s trading session.
On the domestic bourses, prices rose by 1.6 percent and closed at Rs.6014/bbl after touching an intra-day high of Rs.6023/bbl on Wednesday.
API Inventories Data
As per the American Petroleum Institute (API) report last night, US crude oil inventories rose more than expected by 4.9 million barrels to 355.70 million barrels for the week ending on 17th January 2014. Gasoline inventories rose by 1.1 million barrels to 234.88 million barrels and whereas distillate inventories declined by 2.3 million barrels to 118.20 million barrels for the same week.
EIA Inventories Forecast
The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 9:30pm IST and US crude oil inventories is expected to gain by 0.6 million barrels for the week ending on 17th January 2013. Gasoline stocks are expected to gain by 2.1 million barrels whereas distillate inventories are expected to plunge by 0.9 million barrels for the same period.
From the intra-day perspective, we expect crude oil prices to trade lower on the back of expectations of rise in US crude oil inventories. Further, increase in API crude oil inventories in yesterday’s trade will exert downside pressure on the prices. Additionally, unfavorable manufacturing data from China, weak market sentiments along with strength in the DX will act as a negative factor. However, sharp downside in the prices will be cushioned as a result of forecast for favorable manufacturing data from Euro Zone and US in the evening session. Also, IEA raising the global demand outlook for 2014 coupled with estimates of positive economic data from US in the evening session will restrict sharp downside movement in the prices. In the Indian markets, Rupee depreciation will prevent sharp downside in the prices.