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Commodities Energy

Oil and natural gas daily review (June 12, 2014)

June 12, 2014, Thursday, 07:01 GMT | 02:01 EST | 10:31 IST | 13:01 SGT
Contributed by Angel Broking

Crude Oil

Nymex crude oil prices traded on a flat note and gained marginally yesterday on the back of decline in US crude oil inventories. Additionally, sharp fall in Cushing inventories of around 49 percent since January 2014 after start of southern leg of Keystone XL pipeline acted as a positive factor. Further, Organization of Petroleum Exporting Countries (OPEC) which kept its production quota unchanged at 30 million barrels a day for the fifth consecutive time and it left the cartel’s output below the forecast demand for the year. This factor will lead to shortage of supply in future and thereby led to positive sentiments in the commodity.

However, sharp upside in the prices was prevented due to World Bank cutting the global growth forecast for current year as well as estimating a slow economic growth in major developed and developing economies. In addition to this, refineries operated at 87.9 percent for the last week from earlier capacity of 90.8 percent in prior week capped sharp gains in the prices. Crude oil prices touched an intra-day high of $104.81/bbl and closed at $104.40/bbl in yesterday’s trading session.

On the MCX, prices rose around 0.4 percent as a result of Rupee depreciation and closed at Rs.6194/bbl after touching an intra-day high of Rs.6224/bbl on Wednesday.

EIA Inventories Data

As per the US Energy Department (EIA) report, US crude oil inventories declined by 2.6 million barrels to 386.90 million barrels for the week ending on 6th June 2014. Gasoline stocks rose by 1.7 million barrels to 213.60 million barrels and whereas distillate stockpiles gained by 900,000 barrels for the last week.


On an intraday basis, we expect crude prices to trade on a mixed note as the OPEC agreed to maintain its production target at 30 million bpd, thereby putting group’s output below projected demand for the rest of the year. Also, crude inventories dropped for a second week in the U.S., the world’s biggest oil consumer will support gains. While on the other hand, weak market sentiments along with strength in the DX will exert downside pressure on prices.

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