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Commodities Energy

Oil and natural gas daily review (July 02, 2014)

July 2, 2014, Wednesday, 09:20 GMT | 04:20 EST | 12:50 IST | 15:20 SGT
Contributed by Angel Broking


Crude Oil

Oil prices held declined marginally by 0.2 percent on Tuesday, although manufacturing activity grew in the US and China, the two biggest oil consumers. Manufacturing activity in China, the world's biggest oil importer, grew in June for the first time in six months, according to a private survey. Manufacturing activity in the US, the world's biggest oil consumer, grew in June for the 13th-straight month, though the pace of the expansion slowed from May.

Oil markets have for weeks been rattled by supply concerns due to the Ukraine crisis, while a takeover of large areas of Iraq by Sunni militants has stoked fears of disruption in exports from OPEC's second-biggest producer. Although oil exports have not been disrupted so far, the geopolitical uncertainty is likely to keep supporting prices in the short term.

On the MCX, crude prices declined by 0.6 percent and closed at Rs.6301/bbl

API inventory update

The API released its weekly inventories report last night at 8:00pm IST and US crude oil inventories declined by 0.876 million barrels for the week ending on 27th June 2014. Gasoline stocks fell by 0.407 million barrels whereas distillate inventories rose by 4.4 million barrels for the same time period.

EIA inventory forecast

The EIA is scheduled to release its weekly inventories report tonight at 8:00pm IST and US crude oil inventories is expected to decline by 2.2 million barrels for the week ending on 27th June 2014. Gasoline stocks are expected to gain by 0.4 million barrels whereas distillate inventories are expected to increase by 0.8 million barrels for the same time period.


Outlook

On an intraday basis, we expect crude prices to trade on a weak note on profit booking at higher levels although violence in Ukraine has escalated. Also, manufacturing activity in the US and China has gained momentum indicating that crude demand will rise in the coming months acting as a positive factor.

Meanwhile, the EIA inventories due to be released tonight is expected to report a drawdown in stockpiles further supporting prices.

On the MCX, crude prices are expected to trade on a lower note in line with weakness in international markets.