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Commodities Energy

Oil and natural gas daily review (June 30, 2014)

June 30, 2014, Monday, 09:17 GMT | 04:17 EST | 12:47 IST | 15:17 SGT
Contributed by Angel Broking


Crude Oil

Ease of fears over exports disruptions from Iraq and assurances from United Nations Iraq Special Envoy Nickolay Mladenov that Iraq's southern oilfields, which produce most of the nation's 3.3 million barrels per day, remained unaffected, cooled oil prices on both sides of the Atlantic.

Iraq ships 90 percent of its crude exports from southern terminals, which are far from the Sunni insurgency. The country's oil exports in June were near record rates at around 2.53 million barrels per day. The conflict in Iraq has added about a $3 per barrel risk premium into the Brent and U.S. crude oil market. On the NYMEX, WTI Crude oil prices declined by 1.42 percent touched a weekly low of $105.43/bbl and closed at $105.74/bbl.

On the domestic bourses, prices declined by 1.49 percent. Crude prices closed at Rs.6364/bbl on Friday after touching a weekly low of Rs.6348/bbl.


Natural gas

U.S. natural gas futures fell on Friday and ended the week more than 2 percent lower as a string of larger-than-average weekly injections has begun to ease concerns about adequate gas supply for winter.

Bearish sentiment continued to weigh on Friday as the June Fourth holiday was expected to dent industrial demand for natural gas. Over the next two weeks, U.S. weather models forecast slightly above-normal temperatures, according to forecast Thomson Reuters Analytics.


Outlook

On an intraday basis, we expect crude prices to trade sideways as the situation in Iraq has eased down a bit along with the buildup in crude inventory in the recent weeks. This indicates potential dip in demand from the US pressurizing crude prices. In addition, oil output in Libya has been increasing in the recent weeks easing fears of supply disruption.

On the MCX, crude oil prices are expected to trade sideways in line with international markets.