Commodities » Energy

Oil and natural gas daily review (March 14, 2013)

Contributed by Angel Broking

Nymex crude oil prices traded on a flat note and declined marginally yesterday taking cues from more than expected rise in the US crude oil inventories coupled with strength in the DX.

However, sharp fall in the oil prices was cushioned as a result of mixed global market sentiments along with positive retail sales and core retail sales data from the US. Crude oil prices touched an intra-day low of $91.91/bbl and closed at $92.50/bbl in yesterday's trading session.

On the domestic bourses, prices gained by 0.1 percent on account of depreciation in the Indian Rupee and closed at Rs.5,041/bbl after touching an intra-day high of Rs.5,077/bbl on Wednesday.

EIA Inventories Data

As per the US Energy Department (EIA) report, US crude oil inventories rose more than expectations by 3.8 million barrels to 381.40 million barrels for the week ending on 1st March 2013.

Gasoline stocks declined by 0.6 million barrels to 227.90 million barrels and whereas distillate stockpiles fell by 3.8 million barrels to 120.40 million barrels for the last week.

News

As per the EIA report, US crude oil production climbed by 66,000 barrels a day to 7.159 million barrels a day in the last week. The output is at the highest level since July 1992. The rise in production is because on new technology which is a combination of horizontal drilling and hydraulic fracturing, or fracking that has unlocked supplies trapped in shale formations in states including North Dakota, Texas and Oklahoma. US crude output is expected to be at an average of 7.31 million barrels a day in 2013 and forecasted at 7.88 million in 2014 as per the EIA short term energy outlook report.


Outlook

For the intra-day perspective, we expect crude oil prices to trade on a negative note on the back of more than expected rise in US crude oil inventories, increase in US crude output along with mount in the OPEC production. However, sharp downside in the prices will be cushioned on account of mixed global market sentiments coupled with weakness in the DX. Appreciation in the Indian rupee will add downside pressure on the prices on the MCX platform.