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Commodities Energy

Oil and natural gas daily review (March 14, 2014)

March 14, 2014, Friday, 05:14 GMT | 01:14 EST | 10:44 IST | 13:14 SGT
Contributed by Angel Broking


Crude Oil

Oil prices have been trading on a negative note for the past few trading sessions on due to slew of data releases from China showing signs of distress in the economy. However, prices recovered in yesterday’s trading session from its lowest closing in more than a month as investors believed that the test of SPR release will not do much to increase the oil supplies in the US as the release was just 1% of the of total emergency reserves and the similar actions were undertaken in August 1990 and November 1985.

On the other hand the tensions between Ukraine and Russia seem to be intensified and further support crude prices in the coming session. The spread between Brent and WTI now is narrower by slightly less than $10.

Domestic markets took cues from the rise in international markets as crude prices on the MCX gained by 0.6 percent and closed at Rs.6021 /bbl on Thursday.


Natural Gas

Nymex natural gas prices dropped around 2.7 percent on the back of less than expected decline in US natural gas inventories. Further, forecast for less cool weather conditions coupled with strength in the DX exerted downside pressure on the prices.

Gas prices touched an intra-day low of $4.355/mmbtu and closed at $4.366/mmbtu in yesterday’s trade. On the MCX, prices slipped more than 3 percent due to Rupee appreciation.

EIA Inventories Data

US Energy Information Administration (EIA) in its weekly inventories data released yesterday showed that inventories declined by 195 bcf for the week ending 7thMarch14, 100 bcf larger than the five year average.


Outlook

From an intraday perspective, crude prices will trade lower as the data set released from China yesterday showed that economy slowed markedly in the first two months of the year, with growth in investment, retail sales and factory output all falling to multi-year lows. Besides, China's implied oil demand fell 3.1 percent in the same time frame from a year ago, as the economy of the world's second largest oil consumer slowed sharply. In the Indian markets, prices will trade positive taking cues from international markets and the rupee weakness in today’s trading session.

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