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Commodities Energy

Oil and natural gas daily review (June 13, 2014)

June 13, 2014, Friday, 06:32 GMT | 01:32 EST | 10:02 IST | 12:32 SGT
Contributed by Angel Broking


Crude Oil

Crude oil prices rose on Thursday and hit a eight month high after militants connected to Al-Qaeda increased their control over the city of northern Iraq, hampering repairs to the country’s primary pipeline that runs from the Kirkuk oil field to the port of Ceyhan in Turkey. In response, Iraq’s ground troops and air force launched attacks on the militants in several cities across northern Iraq. There are fears that the instability could eventually migrate to other parts of Iraq where most of Iraq’s oil fields and infrastructure is located.

On the MCX, crude oil prices rose by 1.5 percent taking cues from strong international markets and closed at Rs.6290/bbl.


Natural gas

Natural gas prices on the NYMEX rose by more than 5 percent as the EIA reported a slightly smaller-than-expected storage build than market expectations.

On the MCX, gas prices rose by more than 4.5 percent in line with strong international markets and closed at Rs.281.90/MMBtu.

Natural gas inventory update

The U.S. Energy Information Administration said gas in storage climbed 107 billion cubic feet last week to 1.606 trillion cubic feet. That was slightly below analysts' forecasts, and kept gas in storage at an 11-year low for this time of year.


Outlook

On an intraday basis, we expect crude and gas prices to trade on a positive note as escalation of violence in Iraq will be a boost for oil prices creating supply concerns. Besides, there are fears that this instability could spread to other parts of Iraq where major oil fields are located.

In addition, gasoline demand in the US for driving season will ensure that commercial crude inventories are drained in the coming weeks acting as a positive factor.

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