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Commodities Energy

Oil and natural gas daily review (May 06, 2014)

May 6, 2014, Tuesday, 04:57 GMT | 23:57 EST | 09:27 IST | 11:57 SGT
Contributed by Angel Broking


Crude Oil

WTI crude oil prices declined by 0.3 percent in yesterday’s trading session on reports that China’s manufacturing sector is contracting and Libya’s crude output was recovering at a faster pace. Ample supply is also weighing on the crude prices as last week's report from the U.S.EIA showed an unexpected increase in gasoline stockpiles.

However sharp decline in prices were cushioned as growth in the U.S. services sector accelerated in April, rising at the fastest pace in eight months, providing further evidence that economic activity is regaining momentum.

In Libya, tribesmen ended a blockade of the El Sharara oilfield and engineers said they hoped to resume pumping within a week. On the other hand, energy markets are troubled with tensions escalating in Ukraine as Russia, which supplies a third of the European Union's natural gas demand, much of which passes through Ukraine, has threatened to reduce supplies to Kiev in June if no prepayment is received.

API inventories forecast

The API is scheduled to release its weekly inventories report tonight at 8:00pm IST and US crude oil inventories is expected to gain by 1.5 million barrels for the week ending on 2nd May 2014. Gasoline stocks are expected to gain by 0.2 million barrels whereas distillate inventories are expected to have risen by 0.8 million barrels for the same time period.


Outlook

On an intraday basis, crude oil is expected to trade sideways as the data released from US shows that the economy is on a growth trajectory, while the crude oil inventories at record highs can exert downside pressure on prices.

Also, slowdown in Chinese manufacturing raises concerns on the demand side from one of the largest consumers of energy acting as a negative factor. In addition, hopes of recovering crude output from Libya can also push down prices.

On the MCX, crude oil prices are expected to trade sideways to weaker taking cues from international markets and rupee movements.