Commodities

Oil and natural gas daily review (January 30, 2013)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices increased around 1.7 percent yesterday on the back of favorable house price index data from US along with weakness in the DX. Additionally, expectations that US Federal Reserve will continue with its bond buying plan also supported an upside in the crude oil prices.

However, sharp upside in the prices was capped on account of decline in US consumer confidence data coupled with rise in US crude oil inventories. Crude oil prices touched an intra-day high of $ 97.82/bbl and closed at $97.57/bbl in yesterday's trading session.

On the domestic bourses, prices rose by 0.3 percent and closed at Rs.5,228/bbl after touching an intra-day high of Rs.5,248/bbl on Tuesday. However, appreciation in the Indian Rupee prevented sharp gains in the prices on the MCX.

API Inventories Forecast

As per the American Petroleum Institute (API) report last night, US crude oil inventories rose more than expected by 4.2 million barrels to 368.21 million barrels for the week ending on 25th January 2012. Gasoline inventories gained around 2.4 million barrels to 231.98 million barrels and whereas distillate inventories declined by 1.8 million barrels to 130.26 million barrels for the same week.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 9:00pm IST and US crude oil inventories is expected to rise by 2.6 million barrels for the week ending on 25th January 2012. Gasoline stocks are expected to fall by 0.1 million barrels whereas distillate inventories are expected to drop by 1.1 million barrels for the same period.

Outlook

In today's session, we expect crude oil prices to trade higher on the expectations that the US Federal Reserve might extend its bond buying program till some more time. This is likely to spur growth in the economy resulting in increase in the demand for the oil. Weakness in the DX is also expected to support an upside in the crude oil prices today. However, expectation of rise in the crude oil supplies might restrict gains in the crude oil prices. In the domestic market, appreciation in the rupee is expected to restrict gains in the crude oil prices on MCX.