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Commodities Energy

Oil and natural gas daily review (June 11, 2014)

June 11, 2014, Wednesday, 08:49 GMT | 03:49 EST | 12:19 IST | 14:49 SGT
Contributed by Angel Broking


Crude Oil

Stronger dollar and profit booking at higher levels led to correction in Brent as well as WTI oil prices on Tuesday following strong gains in the previous session. Brent futures closed at $109.99 on Monday, the highest in nearly two weeks, supported by positive economic data from China and the United States, the world's two largest energy consumers. The spread between the two benchmarks, which has been narrowing over the past two weeks, closed at $5.17, its lowest point since April 15.

China's central bank on Monday announced a package to relax policy in weaker areas of the economy including farming and small- and medium-sized companies, an action that was expected to promote growth and potentially bolster fuel demand.

On the other side, the oil markets are keen for any surprises from the Organization of the Petroleum Exporting Countries (OPEC), which meets in Vienna on Wednesday to decide oil output targets.

On the MCX, crude prices declined marginally by 0.2 percent and closed at Rs.6170/bbl.

API inventory update

The API released its weekly inventories report last night at 8:00pm IST and US crude oil inventories rose by 1.5 million barrels for the week ending on 6th June 2014. Gasoline stocks declined by 0.44 million barrels whereas distillate inventories fell by 0.29 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 1.9 million barrels for the week ending on 6th June 2014. Gasoline stocks are expected to increase by 0.8 million barrels whereas distillate inventories are expected to increase by 1.2 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 as the markets await what targets OPEC decide to keep its quotas for production. Whereas the EIA inventory due tonight is expected to show a drawdown in crude inventories acting as a positive factor. In addition, China announcing a policy package to the weaker areas of the economy will act as a positive factor.

On the MCX, crude prices are expected to trade on a weak note taking cues from international markets.