Commodities » Energy

Oil and natural gas daily review (March 18, 2013)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices increased by 0.6 percent in the last week taking cues from rise in retail sales, unexpected decline in US unemployment claims along with decline in inflation of US which led to expectations of rise in demand for the fuel. Further weakness in the DX also supported an upside in the prices.

However, sharp upside in the prices was capped on the back of rise in the US crude oil inventories, increase in OPEC production along with rise in US output at highest level since July 1992. Crude oil prices touched a weekly high of $93.84/bbl and closed at $93.45/bbl in last trading session of the week.

On the domestic bourses, prices gained by 1.7 percent and closed at Rs.5,061/bbl on Friday after touching a high of Rs.5,077/bbl in the last week.


Natural Gas

On a weekly basis, Nymex natural gas prices rose by more than 6 percent on the back of more than expected decline in US natural gas inventories coupled with forecast for cooler winter weather conditions.

Weakness in the DX also acted as a positive factor for the prices. Gas prices touched a weekly high of $3.919/mmbtu and closed at $3.862/mmbtu on Friday.

On the domestic front, prices increased by 5.5 percent and closed at Rs.208.70/mmbtu on Friday after touching a high of Rs.212.40/mmbtu in the last week. Appreciation in the Indian Rupee restricted sharp gains in the prices on the MCX.


Outlook

From the intra-day perspective, we expect crude oil to trade lower on the back of weak global market sentiments coupled with strength in the DX. Additionally, rise in the crude output from Saudi Arabia and Iraq will also exert downside pressure on the prices. However, sharp fall in the prices will be cushioned on account of shutdown in pipeline in Libya.

In the Indian markets, depreciation in the Rupee will cushion sharp downside in the prices on the MCX.