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Commodities Energy

Oil and natural gas daily review (July 30, 2014)

July 30, 2014, Wednesday, 06:14 GMT | 01:14 EST | 10:44 IST | 13:14 SGT
Contributed by Angel Broking


Crude Oil

WTI crude oil prices declined by around 0.7 percent while Brent crude oil gained by 0.3 percent as new sanctions on Russia looked set to worsen relations between Moscow and the West, while U.S. prices slipped after a Kansas refinery fire curbed demand for WTI crude. However many traders remained dubious over whether the sanctions would have a major impact on immediate supplies.

Putting further pressure on Russia, U.S. President Barack Obama said in an official statement on Tuesday afternoon that the United States has expanded sanctions to include energy, defense and finance sectors of the Russian economy.

Inventories in the Cushing, Oklahoma, delivery point for the U.S. crude contract, have fallen to their lowest in six years, putting more scrutiny on local supplies in the area. Data released on Tuesday by the American Petroleum Institute showed Cushing stocks fell by a further 914,000 barrels.

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 1.5 million barrels for the week ending on 25th July 2014. Gasoline stocks are expected to gain by 1.3 while distillate inventories are also expected to increase by 1.5 million barrels for the same time period.


Outlook

On an intraday basis, we expect Brent crude oil prices in to trade higher as the ongoing tensions between Russia and the West over Ukraine will provide the much needed cushion to prices. On the other hand, WTI oil prices will react to the news from the US where the refinery in Kansas has affected the crude demand exerting downside pressure. Meanwhile, markets are waiting fresh U.S. economic data from the US, including second-quarter gross domestic product due on Wednesday and the monthly jobs report on Friday. The outcome of all these events would likely decide further trajectory of oil prices in the coming session.

On the MCX, crude prices are expected to trade lower taking cues from weakness in NYMEX crude oil prices.

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