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Commodities Energy

Oil and natural gas daily review (June 25, 2014)

June 25, 2014, Wednesday, 12:44 GMT | 07:44 EST | 16:14 IST | 18:44 SGT
Contributed by Angel Broking


Crude Oil

Continued fighting in Iraq, supply disruptions in Libya supported Brent prices while profit booking at higher levels in WTI crude led to decline in prices by 0.1 percent. Although refineries in the southern regions, which produce the bulk of Iraq's oil exports, were unaffected, fighting in OPEC's second-largest producer to continue to support prices.

Government-led forces continued to fight Islamist insurgents for control of Iraq's biggest oil refinery on Tuesday. The refinery, a 300,000-barrels-per-day facility in Baiji, north of Baghdad, was shut down last week and has been under siege since. In Libya, an oil port that had reopened over the weekend closed again. The country's production is around 270,000 bpd, a fraction of the 1.6 million bpd it produced before the 2011 civil war.

On the MCX, crude prices declined by 0.1 percent and closed at Rs.6400/bbl.

API inventory update

The API released its weekly inventories report last night at 8:00pm IST and US crude oil inventories rose by 4 million barrels for the week ending on 20th June 2014. Gasoline stocks rose by 2.2 million barrels whereas distillate inventories fell by 0.253 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 1.6 million barrels for the week ending on 20th June 2014. Gasoline stocks are expected to gain by 1 million barrels whereas distillate inventories are expected to increase by 0.9 million barrels for the same time period.


Outlook

On an intraday basis, we expect crude prices to trade on a positive note as Iraq conflict still bothers energy markets with supply constraints possible out of the region. Militants have taken control over Baiji the biggest oil refinery in Iraq raising concerns over internal supply in the region. There is no threat to supply until militants take control over southern Iraq where major oil fields and infrastructure is located. On the flip side, the API inventories last night reported crude build up of around 4 million barrels. Meanwhile, the EIA report due tonight is expected to show a drawdown supporting crude prices.

On the MCX, crude prices are expected to trade on a positive note in line with strength in international markets.

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