Commodities » Energy

Oil and natural gas daily review (March 20, 2013)

Contributed by Angel Broking

Crude Oil

Nymex crude oil prices declined by 1.7 percent yesterday taking cues from Cyprus parliament rejected the proposal of levying taxes on the bank deposits which led to concerns for the Euro Zone debt crisis. Additionally, strength in the DX also exerted downside pressure on the crude prices.

However, sharp downside in the prices was cushioned on account of unexpected decline in US crude oil inventories from API. Crude oil prices touched an intra-day low of $92.03/bbl and closed at $92.16/bbl in yesterday's trading session.

On the domestic bourses, prices declined by 1.4 percent and closed at Rs.5010/bbl after touching an intra-day low of Rs.4997/bbl on Tuesday. Depreciation in the Indian Rupee cushioned sharp fall in the prices on the MCX.

API Inventories Data

As per the American Petroleum Institute (API) report last night, US crude oil inventories declined unexpectedly by 413,000 barrels to 376.69 million barrels for the week ending on 15th March 2013. Gasoline inventories rose by 278,000 barrels to 227.41 million barrels and whereas distillate inventories dropped by 1.3 million barrels to 119.14 million barrels for the same week.

EIA Inventories Forecast

The US Energy Department (EIA) is scheduled to release its weekly inventories report today at 8:00pm IST and US crude oil inventories is expected to rise by 2.0 million barrels for the week ending on 15th March 2013. Gasoline stocks are expected to fall by 2.1 million barrels whereas distillate inventories are expected to drop by 0.8 million barrels for the same period.


Outlook

From the intra-day perspective, we expect crude oil to trade on negative note on the back of weak global market sentiments coupled with strength in the DX. Further, Cyprus parliament rejected the proposal of levying taxes on the bank deposits which led to concerns over the Euro Zone debt crisis will add downside pressure. Additionally, Expectations of rise in US crude oil inventories coupled with rising crude output from Saudi Arabia and Iraq may act as a negative factor. However, sharp downside in the prices will be cushioned on account of unexpected decline in crude oil inventories from API along with shutdown in pipeline in Libya. In the Indian markets, depreciation in the Indian Rupee may cushion sharp decline in prices on MCX.