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Commodities Energy

Oil and natural gas daily review (June 16, 2014)

June 16, 2014, Monday, 05:20 GMT | 00:20 EST | 08:50 IST | 11:20 SGT
Contributed by Angel Broking


Crude Oil

Global oil prices rose on account of strong Chinese data and US data pointing towards healthy economic growth indicating high demand from the top two oil consumers.

The positive data boosted an oil market already bolstered by the loss of crude exports from Libya, where violence and civil turmoil have cut oil output by more than 1 million barrels per day (bpd) from pre-unrest levels.

In addition, China's central bank announced a package last week 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.

Prices gained as 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.

WTI Crude oil prices declined by 4.14 percent touched a weekly high of $107.68/bbl and closed at $106.91/bbl. On the domestic bourses, prices gained by 5.65 percent due taking cues from international market. Crude prices closed at Rs.6399/bbl on Friday after touching a weekly high of Rs.6414/bbl.


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.