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Commodities Energy

Oil and natural gas daily review (July 10, 2014)

July 10, 2014, Thursday, 11:21 GMT | 06:21 EST | 14:51 IST | 17:21 SGT
Contributed by Angel Broking


Crude Oil

Faltering demand for gasoline in the US, resumption of Libya’s crude output and exports and ease of geo-political tensions have been the prime factors behind recent fall in oil prices (both Brent and WTI).

Libya has restarted the 340,000-barrel-per-day (bpd) El Sharara field after protesters ended a four-month strike, which could double the country's current crude output. The U.S. benchmark has fallen in nine straight sessions, its longest such streak since December 2009. As speculators dumped Brent, its premium over U.S. crude touched its narrowest point in almost a month at $5.15, and then widened to settle at $5.85.

On the MCX, crude prices declined by 1.2 percent in line with weakness in international markets and closed at Rs.6116/bbl.

EIA inventory update

The EIA released its weekly inventories report last night and US crude oil inventories declined by 2.4 million barrels for the week ending on 4th July 2014. Gasoline stocks rose by 0.579 million barrels whereas distillate inventories rose by 0.227 million barrels for the same time period.


Natural Gas

U.S. natural gas futures lost almost 1 percent on Wednesday, the third decline in a row, on forecasts for continued cooler-than-normal weather and expectations for another big storage build. After a record eight consecutive triple-digit injections, the inventory report due tonight is expected to show a buildup of 92 BCF of gas.


Outlook

Crude prices have been falling in the recent weeks as resumption of Libyan exports and ease of Iraq situation has ensured that oil markets remain well supplied. Besides, the reduction in gasoline demand in the US is also raising concerns from the world’s largest consumer of crude.

At the same time, demand for crude has been low from European refiners whose margins have been squeezed by an influx of diesel from the United States, Russia and Asia. All the factors are likely to push crude prices down further in the coming session.

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