Oil and natural gas daily review (January 31, 2014)
January 31, 2014, Friday, 09:33 GMT | 05:33 EST | 15:03 IST | 17:33 SGT
Nymex crude oil prices gained around 1 percent yesterday on the back of expectations of rise in demand for the fuel after US GDP grew as estimated in Q4 of 2013. Further, increase in distillate and gasoline demand during the week supported an upside in the prices.
However, sharp upside in the prices was prevented due to QE tapering by the Federal Reserve in its meeting on Wednesday. Additionally, strength in the DX capped sharp gains in the prices. Crude oil prices touched an intra-day high of $98.59/bbl and closed at $98.20/bbl in yesterday’s trading session.
On the domestic bourses, prices increased by 0.4 percent and closed at Rs.6156/bbl after touching an intra-day high of Rs.6199/bbl on Thursday.
Nymex natural gas prices declined sharply around 10 percent yesterday on the back of estimates of mild winter weather conditions during the coming weeks which will lead to decline in demand for the commodity. Further, strength in the DX also acted as a negative factor.
Additionally, decline in US natural gas inventories failed to provide respite to fall in the prices. Gas prices touched an intra-day low of $4.9/mmbtu and closed at $4.928/mmbtu in yesterday’s trade.
On the domestic front, prices slipped around 0.2 percent and closed at Rs.320.30/mmbtu after touching an intra-day low of Rs.318.20/mmbtu on Thursday. Rupee depreciation prevented sharp fall in the prices.
EIA Inventories Data
US Energy Information Administration (EIA) released its weekly inventories yesterday and US natural gas inventory declined as expected by 230 billion cubic feet (bcf) which stood at 2.193 trillion cubic feet for the week ending on 24thJanuary 2014
From the intra-day perspective, we expect crude oil prices to trade on a mixed note on the back of rise in US and API crude oil inventories during the week will exert downside pressure on the prices. Further, weak market sentiments after another round of QE tapering by the Federal Reserve along with strength in the DX will act as a negative factor. While on the other hand, rise in gasoline and distillate demand will support an upside in the prices. Additionally, expectations of rise in demand for the fuel after US GDP grew in line with estimates will act as a positive factor. In the Indian markets, Rupee appreciation will cap sharp gains or add downside pressure in the prices.