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Commodities Energy

Oil and natural gas daily review (January 24, 2014)

January 24, 2014, Friday, 04:52 GMT | 23:52 EST | 09:22 IST | 11:52 SGT
Contributed by Angel Broking

Crude Oil
Nymex crude oil prices increased around 0.6 percent yesterday on the back of more than expected decline in US distillate inventories as lower temperatures bolstered heating demand. Further, decline in US crude oil production by 107,000 barrels a day to 8.05 million barrels for week ending on 17th Jan’14 but still remained at the highest level since 1988 coupled with weakness in the DX supported an upside in the prices.
However, sharp positive movement in the prices was prevented due to decline in US refinery capacity by 3.5 percent to 86.5 percent for the last week. The US refinery utilization rates have dropped around nine times in month of January in last ten years. Crude oil prices touched an intra-day high of $97.84/bbl and closed at $97.30/bbl in yesterday’s trading session.
On the domestic bourses, prices rose around 1.4 percent due to Rupee depreciation and closed at Rs.6101/bbl after touching an intra-day high of Rs.6108/bbl on Thursday.
EIA Inventories Data
As per the US Energy Department (EIA) report, US crude oil inventories increased more than expected by 990,000 barrels to 351.20 million barrels for the week ending on 17th January 2014. Gasoline stocks gained by 2.1 million barrels to 235.27 million barrels and whereas distillate stockpiles plunged sharply by 3.2 million barrels to 120.74 million barrels for the last week.
Natural Gas
EIA Inventories Data
US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory declined less than expected by 107 billion cubic feet (bcf) which stood at 2.423 trillion cubic feet for the week ending on 17thJanuary 2014.
From the intra-day perspective, we expect crude oil prices to trade on a mixed note on the back of decline in US and API distillate inventories during the week will support an upside in the prices. Further, decline in US crude oil production in the last week along with International Energy Agency (IEA) raising the forecast for global crude oil demand will act as a positive factor. While on the other hand, rise in US crude oil and gasoline inventories coupled with fall in US refinery activity will exert downside pressure on the prices. Additionally, weak market sentiments, strength in the DX along with concerns of QE tapering by the Federal Reserve will act as a negative factor. In the Indian markets, Rupee depreciation will cushion sharp fall or support an upside in the prices.