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Commodities Energy

Oil and natural gas daily review (March 05, 2014)

March 5, 2014, Wednesday, 08:21 GMT | 03:21 EST | 12:51 IST | 15:21 SGT
Contributed by Angel Broking


Crude Oil

Nymex crude oil prices declined around 1.5 percent today on the back of ease of geopolitical tensions between Ukraine and Russia after Russian President Vladimir Putin recalled its troops. This factor led to ease of supply concerns from Russia which is the world’s biggest energy exporter thereby exerting downside pressure on the prices. Further, strength in the DX along with rise in API crude oil inventories acted as a negative factor.

Additionally, upbeat market sentiments coupled with decline in API distillate and gasoline inventories failed to provide respite to fall in the prices. Crude oil prices touched an intra-day low of $102.85/bbl and closed at $103.30/bbl in yesterday’s trading session.

On the domestic bourses, prices dropped by 1.7 percent due to Rupee appreciation and closed at Rs.6395/bbl after touching an intra-day low of Rs.6384/bbl on Tuesday.

API Inventories Data

As per the American Petroleum Institute (API) report last night, US crude oil inventories gained by 1.2 million barrels to 364.40 million barrels for the week ending on 28th February 2014. Gasoline inventories slipped by 1.2 million barrels to 233.40 million barrels and whereas distillate inventories declined by 270,000 barrels to 111.70 million barrels for the same week.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 9:00pm IST and US crude oil inventories is expected to gain by 1.3 million barrels for the week ending on 28th February 2014. Gasoline stocks are expected to fall by 1.2 million barrels whereas distillate inventories are expected to plunge by 1.2 million barrels for the same period.


Outlook

From the intra-day perspective, we expect crude oil prices to trade on a mixed note on the back of upbeat market sentiments coupled with weakness in the DX will support an upside in the prices. Further, decline in API distillate and gasoline inventories and expectations of fall in the same from EIA in today’s trade will act as a positive factor. Additionally, estimates of favorable retail sales data from Euro Zone will act as a positive factor. While on the other hand, ease of geopolitical tensions between Ukraine and Russia will exert downside pressure on the prices. Also, rise in API crude oil inventories and forecast for increase in EIA crude oil inventories will act as a negative factor. In the Indian markets, Rupee appreciation will cap sharp gains or exert downside pressure on the prices.